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Economic Aid to Post-conflict Countries: A Methodological Critique of Collier and Hoeffler

  • Astri Suhrke
  • Espen Villanger
  • Susan L. Woodward

This paper retests the analysis of "Aid Policy and Growth in Post-Conflict Societies," by Paul Collier and Anke Hoeffler (October 2002 and forthcoming in European Economic Review). It finds that their data and analysis do not support their conclusions and policy recommendations on the optimal timing and amounts of aid. These conclusions depend on very few observations (13 for the period of peace-onset, 13 for years 4 to 7 when a growth spurt is said to make aid particularly effective, and 8 for the period when aid should taper off); are vulnerable to the same methodological misspecifications identified in the Burnside and Dollar approach on which this analysis is based; and are not grounded in any theoretical formulation about the special relation between aid and growth in post-conflict conditions. Conventional econometric procedures are often not followed; recoding the sample to exclude cases that are not civil wars reduces the effect of aid on growth in post-civil war countries to less than half of what they claim; and the difference with the relationship for "normal" countries becomes negligible (0.26 percentage points), although it depends on identification of the sample. Their claims on the poverty-efficiency of aid are assumed, not analysed. The confidentiality of their policy measure (CPIA) prevented testing the aid-policy relationship.

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Paper provided by CMI (Chr. Michelsen Institute), Bergen, Norway in its series CMI Working Papers with number WP 2005:4.

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Length: 26 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:chm:wpaper:wp2005-4
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  1. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  2. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
  3. R. Lensink & H. White, 2001. "Are There Negative Returns to Aid?," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 42-65.
  4. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
  5. Burnside, Craig & Dollar, David, 2004. "Aid, policies, and growth : revisiting the evidence," Policy Research Working Paper Series 3251, The World Bank.
  6. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841 Elsevier.
  7. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  8. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  9. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)," NBER Working Papers 9846, National Bureau of Economic Research, Inc.
  10. repec:rus:hseeco:70719 is not listed on IDEAS
  11. Hartzell, Caroline & Hoddie, Matthew & Rothchild, Donald, 2001. "Stabilizing the Peace After Civil War: An Investigation of Some Key Variables," International Organization, Cambridge University Press, vol. 55(01), pages 183-208, December.
  12. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  13. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  14. Collier, Paul & Hoeffler, Anke, 2004. "Aid, policy and growth in post-conflict societies," European Economic Review, Elsevier, vol. 48(5), pages 1125-1145, October.
  15. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
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