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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. 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.
    2. repec:kap:pubcho:v:175:y:2018:i:1:d:10.1007_s11127-018-0514-8 is not listed on IDEAS
    3. Anna Minasyan, 2016. "US Aid, US educated Leaders and Economic Ideology," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 215, Courant Research Centre PEG.
    4. Axel Dreher & Valentin F. Lang & Sebastian Ziaja, 2017. "Foreign Aid in Areas of Limited Statehood," CESifo Working Paper Series 6340, CESifo Group Munich.
    5. repec:eee:wdevel:v:99:y:2017:i:c:p:320-334 is not listed on IDEAS
    6. 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.
    7. repec:bla:coecpo:v:35:y:2017:i:3:p:518-531 is not listed on IDEAS

    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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