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Aid Effectiveness: The Role of the Local Elite

  • Luis Angeles
  • Kyriakos C Neanidis

We study the importance of the local elite as a determinant of the effectiveness of foreign aid in developing countries. An "extractive" elite will misuse aid flows, an issue that is probably as old as foreign aid itself. We proxy for the existence of an "extractive" elite by using an historically determined variable: the percentage of European settlers in colonial times. Our econometric results clearly show the importance of this factor and its robustness to a wide set of alternative aid-growth relationships advanced in the literature.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2007_01.

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Date of creation: Oct 2006
Date of revision: Dec 2006
Handle: RePEc:gla:glaewp:2007_01
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