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Aid and institutions in transition economies

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  • Askarov, Zohid
  • Doucouliagos, Hristos

Abstract

We investigate whether aid contributed to institutional development in transition economies. We find that aid flows have a positive effect on democratization, especially on constraints on the executive and political participation. At the same time, total aid has no effect on overall quality of governance, while US aid appears to have a negative impact on some dimensions of governance. Aid’s differential impact on democracy and governance is consistent with uneven development of institutions and the democracy consolidation hypothesis. We also find that aid has a non-linear effect on democracy. Openness has a positive effect on both democracy and good governance. Oil resources have an adverse effect on democracy. Adult mortality, civil war and adherence to Islam are all detrimental to good governance.
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Suggested Citation

  • Askarov, Zohid & Doucouliagos, Hristos, 2014. "Aid and institutions in transition economies," Working Papers eco_2014_8, Deakin University, Department of Economics.
    • Handle: RePEc:dkn:econwp:eco_2014_8
    DOI: 10.1016/j.ejpoleco.2015.01.001
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    2. Dijkstra, Geske, 2018. "Aid and good governance: Examining aggregate unintended effects of aid," Evaluation and Program Planning, Elsevier, vol. 68(C), pages 225-232.
    3. Hammami, Yacine & Bahri, Maha, 2016. "On the determinants of expected corporate bond returns in Tunisia," Research in International Business and Finance, Elsevier, vol. 38(C), pages 224-235.
    4. Askarov, Zohid & Doucouliagos, Hristos, 2015. "Spatial aid spillovers during transition," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 79-95.
    5. Valeria A. Arsenyevа & Svetlana A. Litvinova & Valentina N. Parakhina & Zinaida N. Kozenko & Mikhail Y. Denisov, 2016. "Innovational Development for Transitional Economy – Russia Case Study," Contemporary Economics, Vizja University, vol. 10(4), December.
    6. Amponsah, Mary & Agbola, Frank W. & Mahmood, Amir, 2023. "The relationship between poverty, income inequality and inclusive growth in Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 126(C).
    7. Nikolova, Milena, 2016. "Minding the happiness gap: Political institutions and perceived quality of life in transition," European Journal of Political Economy, Elsevier, vol. 45(S), pages 129-148.
    8. Islam, Md. Rabiul & Madsen, Jakob B. & Raschky, Paul A., 2015. "Gold and silver mining in the 16th and 17th centuries, land titles and agricultural productivity," European Journal of Political Economy, Elsevier, vol. 39(C), pages 150-166.
    9. Admasu Asfaw Maruta & Rajabrata Banerjee, 2024. "Socioeconomic inequalities and the role of sectoral foreign aid in developing countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(3), pages 457-491, July.
    10. Arif, Imran & Hall, Joshua C., 2019. "International flows of people and institutional change," European Journal of Political Economy, Elsevier, vol. 58(C), pages 276-288.
    11. Gnangnon, Sèna Kimm, 2021. "Effect of Development Aid on Productive Capacities," EconStor Preprints 233973, ZBW - Leibniz Information Centre for Economics.
    12. Dzhumashev, Ratbek & Hailemariam, Abebe, 2021. "Foreign aid and the quality of economic institutions," European Journal of Political Economy, Elsevier, vol. 68(C).
    13. Dutta, Nabamita & Williamson, Claudia R., 2016. "Aiding economic freedom: Exploring the role of political institutions," European Journal of Political Economy, Elsevier, vol. 45(S), pages 24-38.
    14. Sena Kimm Gnangnon, 2020. "A Note on the Algebra of Multiple Exchange Rates," Economics Bulletin, AccessEcon, vol. 40(1), pages 316-337.
    15. Doucouliagos, Hristos & Hinz, Thomas & Zigova, Katarina, 2022. "Bias and careers: Evidence from the aid effectiveness literature," European Journal of Political Economy, Elsevier, vol. 71(C).

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    Keywords

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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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