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Government ideology in donor and recipient countries: Does ideological proximity matter for the effectiveness of aid?

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  • Dreher, Axel
  • Minasyan, Anna
  • Nunnenkamp, Peter

Abstract

Political misalignment and greater ideological distance between donor and recipient governments may render foreign aid less effective by adding to transaction costs and eroding trust. We test this hypothesis empirically by considering the political ideology of both governments along the left–right spectrum in augmented models on the economic growth effects of aid. Following the estimation approach of Clemens et al. (2012), we find that aid tends to be less effective when political ideology differs between the donor and the recipient.

Suggested Citation

  • Dreher, Axel & Minasyan, Anna & Nunnenkamp, Peter, 2015. "Government ideology in donor and recipient countries: Does ideological proximity matter for the effectiveness of aid?," European Economic Review, Elsevier, vol. 79(C), pages 80-92.
  • Handle: RePEc:eee:eecrev:v:79:y:2015:i:c:p:80-92
    DOI: 10.1016/j.euroecorev.2015.07.004
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    References listed on IDEAS

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    Cited by:

    1. Minasyan, Anna, 2018. "US aid, US educated leaders and economic ideology," European Journal of Political Economy, Elsevier, vol. 55(C), pages 244-257.
    2. Monika Banaszewska & Ivo Bischoff, 2018. "Grants-in-aid and the prospect of re-election: The impact of EU funds on mayoral elections in Poland," MAGKS Papers on Economics 201822, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. Axel Dreher & Valentin F. Lang & Sebastian Ziaja, 2017. "Foreign Aid in Areas of Limited Statehood," CESifo Working Paper Series 6340, CESifo Group Munich.
    4. Christian Bjørnskov, 2017. "Growth, Inequality, And Economic Freedom: Evidence From The U.S. States," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 518-531, July.
    5. Ambrocio, Gene & Hasan, Iftekhar, 2019. "Friends for the benefits: The effects of political ties on sovereign borrowing conditions," Research Discussion Papers 13/2019, Bank of Finland.
    6. Anna Minasyan & Peter Nunnenkamp, 2016. "Remittances and the Effectiveness of Foreign Aid," Review of Development Economics, Wiley Blackwell, vol. 20(3), pages 681-701, August.
    7. Beletskaya, M., 2019. "Bilateral International Assistance: Factors for Donor Countries," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 95-114.
    8. Thomas Apolte & Lena Gerling, 2018. "Youth bulges, insurrections and labor-market restrictions," Public Choice, Springer, vol. 175(1), pages 63-93, April.
    9. Minasyan, Anna & Nunnenkamp, Peter & Richert, Katharina, 2017. "Does Aid Effectiveness Depend on the Quality of Donors?," World Development, Elsevier, vol. 100(C), pages 16-30.
    10. Gehring, Kai & Michaelowa, Katharina & Dreher, Axel & Spörri, Franziska, 2017. "Aid Fragmentation and Effectiveness: What Do We Really Know?," World Development, Elsevier, vol. 99(C), pages 320-334.
    11. Tomi Ovaska & Ryo Takashima, 2020. "Caveat Emptor: Foreign Aid and Entrepreneurship," Economies, MDPI, Open Access Journal, vol. 8(1), pages 1-13, January.

    More about this item

    Keywords

    Aid effectiveness; Economic growth; Politics and aid; Government ideology;

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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