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Helping Hand ? Aid to Failing States

Author

Listed:
  • Lisa Chauvet

    () (DIAL, IRD, Paris)

  • Paul Collier

    () (CSAE, Oxford)

Abstract

We define ‘failing states’ are those low-income states in which policy and governance is persistently very bad. We develop a theory of reform in these states in which several characteristics of the society might potentially be the binding constraint on change. We then introduce aid, disaggregated into technical assistance and finance, showing how it might affect these constraints. We then test our theory of aid and reform on global data. We estimate hazard functions to establish what enhances the prospects of sustained reform. We find that a proxy for the relaxation of the binding constraints postulated in the theory is highly significant. There is some evidence that both technical capacity in the society and elite interests are particularly important. Early aid has substantial but offsetting effects: technical assistance consolidates incipient reform whereas finance chills it.________________________________ Les Etats fragiles auxquels nous nous intéressons sont les pays à faible revenu caractérisés par la faiblesse de leurs institutions et de leurs politiques économiques. Le statut d’Etat fragile est très persistant. Nous développons une théorie des réformes, adaptée à ce contexte, dans laquelle plusieurs caractéristiques de la société peuvent potentiellement contraindre les réformes. Nous identifions la manière dont l’aide peut influencer ces différentes contraintes en distinguant l’assistance technique du reste de l’aide. Nous proposons ensuite des tests économétriques de manière à identifier les principales contraintes aux réformes dans les Etats fragiles, et le rôle de l’aide. Ces tests suggèrent que les contraintes de capacité institutionnelle et de préférences de l’élite au pouvoir sont particulièrement importantes dans les Etats fragiles. De plus, en début de réforme, l’assistance technique renforce le processus de réforme tandis que l’aide financière le fragilise.

Suggested Citation

  • Lisa Chauvet & Paul Collier, 2006. "Helping Hand ? Aid to Failing States," Working Papers DT/2006/14, DIAL (Développement, Institutions et Mondialisation).
  • Handle: RePEc:dia:wpaper:dt200614
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    File URL: http://www.dial.ird.fr/media/ird-sites-d-unites-de-recherche/dial/documents/publications/doc_travail/2006/2006-14
    File Function: First version, 2006
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    Citations

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    Cited by:

    1. Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2009. "State fragility and economic vulnerability: What is measured and why?," Working Papers P07, FERDI.
    2. Timothy Besley & Torsten Persson, 2011. "Fragile States And Development Policy," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 371-398, June.
    3. Paul Collier, 2006. "Africa : geography and growth," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 235-252.
    4. Lisa Chauvet & Paul Collier, 2008. "Aid and Reform in Failing States," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 22(1), pages 15-24, May.
    5. Paul Collier, 2008. "Les performances de l’Afrique sont-elles les conséquences de sa géographie ?," Économie et Prévision, Programme National Persée, vol. 186(5), pages 11-22.

    More about this item

    Keywords

    Fragile States; reforms; foreign aid; technical assistance; hazard model; Etats fragiles; réformes; aide publique au développement; assistance technique; modèle de durée;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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