IDEAS home Printed from https://ideas.repec.org/p/got/gotcrc/167.html
   My bibliography  Save this paper

Your development or mine? Effects of donor-recipient cultural differences on the aid-growth nexus

Author

Listed:
  • Anna Minasyan

    (Georg-August-University Göttingen)

Abstract

Development aid from the West may lead to adverse growth effects in the global South due to the neglected cultural context in the development framework. There is evidence that development agendas are mainly premised upon western thought and belief systems. Therefore, I hypothesize that the expected effect of development aid on the economic growth of recipients is impaired by cultural differences between western donors and aid recipients. I test this hypothesis empirically by augmenting an aid-growth model with proxy variables of cultural distance between donors and recipients. Namely, based on the theory of cultural transmission, I use donor-recipient weighted genetic distance, to capture vertical transmission of culture. Then, I use western education of the chief executive of the recipient country to capture horizontal transmission of culture. Results of OLS panel estimation in first differences for 1961-2010 period show that a one unit increase in donor-recipient genetic distance reduces the effect of aid on growth by 0.2 percentage points, if aid is increased by one percentage point. In turn, a one percentage point increase in aid yields, on average, 0.3 percentage point increase in growth after a decade, if the leader in power has western education.

Suggested Citation

  • Anna Minasyan, 2015. "Your development or mine? Effects of donor-recipient cultural differences on the aid-growth nexus," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 167, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:167
    as

    Download full text from publisher

    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_167.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, January.
    2. Cosmides, Leda & Tooby, John, 1994. "Better than Rational: Evolutionary Psychology and the Invisible Hand," American Economic Review, American Economic Association, vol. 84(2), pages 327-332, May.
    3. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    4. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," World Bank Economic Review, World Bank Group, vol. 22(2), pages 187-231, June.
    5. Markus Brückner, 2013. "On the simultaneity problem in the aid and growth debate," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 126-150, January.
    6. Alberto Bisin & Thierry Verdier, 2000. ""Beyond the Melting Pot": Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 955-988.
    7. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
    8. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, July.
    9. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
    10. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 469-529.
    11. Michael A. Clemens & Steven Radelet & Rikhil R. Bhavnani & Samuel Bazzi, 2012. "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth," Economic Journal, Royal Economic Society, vol. 122(561), pages 590-617, June.
    12. Klaus Desmet & Michel Breton & Ignacio Ortuño-Ortín & Shlomo Weber, 2011. "The stability and breakup of nations: a quantitative analysis," Journal of Economic Growth, Springer, vol. 16(3), pages 183-213, September.
    13. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1095-1131.
    14. Antonio Spilimbergo, 2009. "Democracy and Foreign Education," American Economic Review, American Economic Association, vol. 99(1), pages 528-543, March.
    15. Amelie Constant & Bienvenue N. Tien, 2010. "African Leaders: Their Education Abroad and FDI Flows," Discussion Papers of DIW Berlin 1087, DIW Berlin, German Institute for Economic Research.
    16. Axel Dreher & Vera Eichenauer & Kai Gehring, 2013. "Geopolitics, Aid and Growth," CESifo Working Paper Series 4299, CESifo Group Munich.
    17. Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
    18. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    19. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
    20. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    21. Dreher, Axel & Minasyan, Anna & Nunnenkamp, Peter, 2013. "Government ideology in donor and recipient countries: Does political proximity matter for the effectiveness of aid?," Kiel Working Papers 1870, Kiel Institute for the World Economy (IfW).
    22. Doucouliagos, Hristos & Paldam, Martin, 2011. "The ineffectiveness of development aid on growth: An update," European Journal of Political Economy, Elsevier, vol. 27(2), pages 399-404, June.
    23. Pemstein, Daniel & Meserve, Stephen A. & Melton, James, 2010. "Democratic Compromise: A Latent Variable Analysis of Ten Measures of Regime Type," Political Analysis, Cambridge University Press, vol. 18(04), pages 426-449, September.
    24. Dreher, Axel & Lamla, Michael J. & Lein, Sarah M. & Somogyi, Frank, 2009. "The impact of political leaders' profession and education on reforms," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 169-193, March.
    25. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    26. Samuel Bazzi & Michael A. Clemens, 2013. "Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 152-186, April.
    27. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    28. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 835-864.
    29. Gibson, Clark C. & Andersson, Krister & Ostrom, The late Elinor & Shivakumar, Sujai, 2005. "The Samaritan's Dilemma: The Political Economy of Development Aid," OUP Catalogue, Oxford University Press, number 9780199278855.
    30. Philipp Kolo, 2012. "Measuring a New Aspect of Ethnicity - The Appropriate Diversity Index," Ibero America Institute for Econ. Research (IAI) Discussion Papers 221, Ibero-America Institute for Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Langlotz, Sarah & Dreher, Axel, 2015. "Aid and growth. New evidence using an excludable instrument," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112878, Verein für Socialpolitik / German Economic Association.
    2. 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.
    3. Axel Dreher & Shu Yu, 2016. "The Alma Mater Effect - Does Foreign Education of Political Leaders Influence Foreign Policy?," CESifo Working Paper Series 5871, CESifo Group Munich.
    4. Philipp Aerni, 2016. "Coping with Migration-Induced Urban Growth: Addressing the Blind Spot of UN Habitat," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-21, August.
    5. 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.
    6. Axel Dreher & Valentin F. Lang & Sebastian Ziaja, 2017. "Foreign Aid in Areas of Limited Statehood," CESifo Working Paper Series 6340, CESifo Group Munich.

    More about this item

    Keywords

    aid effectiveness; cultural differences; genetic distance; western education;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:got:gotcrc:167. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dominik Noe). General contact details of provider: http://www.uni-goettingen.de/en/82144.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.