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The effect of donors' policy coherence on growth

  • Aurore Gary

    ()

    (Axe Développement et mondialisation - CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

  • Mathilde Maurel

    ()

    (Axe Développement et mondialisation - CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

The literature has shown that aid and trade or aid and migration are not independent from each other: aid can be provided for relaxing migration pressures or donors can tie aid in order to increase their exports to developing countries. This finding can be generalized to other donors' policies: investment, technology, environment, security policies and it must be incorporated in the way aid effectiveness is assessed. The effect of aid can be dampened of enhanced, depending on whether aid is a substitute or a complement for other policies. In other words, donors should be consistent to be efficient. Taking advantage of CGD indices, this paper estimate growth equations by controlling for consistency. We estimate a robust and significant positive effect of donors' policy coherence from 22 DAC donors on the economic growth in developing countries. A one standard deviation increase in consistency changes results in an increase in economic growth in developing countries of 14%.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00825816.

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Date of creation: May 2013
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Handle: RePEc:hal:cesptp:halshs-00825816
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