IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Institutions, Trade, and Social Cohesion in Fragile States

  • Mina Baliamoune-Lutz


This paper examines the contribution of institutions, social cohesion, and trade to development (per-capita income) with emphasis on fragile states in Africa. Results from GMM estimations suggest that political institutions, openness to trade, and social cohesion affect growth in fragile states via direct and indirect mechanisms. The results indicate that, beyond a certain level, openness to trade may actually be harmful to economic performance in fragile states, particularly in countries with high export concentration. Improvements in institutional quality, or more specifically in democratization, also may be harmful in the short run. On the other hand, social cohesion has a positive effect once a threshold level is reached. The results associated with the effects of political institutions and openness to trade seem to suggest the possibility of a ‘catch-22’, at least in the short run. If a fragile state tries to improve its political institutions or its openness to trade it may wind up with lower per-capita income. According to the formula used to allocate World Bank-IDA funds get more money, such country would get more aid. However, while obtaining more aid may be a good outcome lower income implies more poverty (assuming no changes in income distribution). Thus, aid may not lead to significant poverty reduction.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 24-2007.

in new window

Length: 29 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:icr:wpicer:24-2007
Contact details of provider: Postal: Corso Unione Sovietica, 218bis - 10134 Torino - Italy
Phone: +39 011 6706060
Fax: +39 011 6706062
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
  2. Jac C. Heckelman & Stephen Knack, 2008. "Foreign Aid and Market-Liberalizing Reform," Economica, London School of Economics and Political Science, vol. 75(299), pages 524-548, 08.
  3. Nunnenkamp, Peter & Thiele, Rainer, 2006. "Targeting aid to the needy and deserving : nothing but promises?," Open Access Publications from Kiel Institute for the World Economy 3875, Kiel Institute for the World Economy (IfW).
  4. Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
  5. Tavares, Jose, 2003. "Does foreign aid corrupt?," Economics Letters, Elsevier, vol. 79(1), pages 99-106, April.
  6. Easterly, William, 2000. "Can institutions resolve ethnic conflict ?," Policy Research Working Paper Series 2482, The World Bank.
  7. Thomas Barnebeck Andersen & Henrik Hansen & Thomas Markussen, 2004. "US Politics and World Bank IDA-Lending," Discussion Papers 05-06, University of Copenhagen. Department of Economics, revised May 2005.
  8. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
  9. Svensson, Jakob, 2000. "Foreign aid and rent-seeking," Journal of International Economics, Elsevier, vol. 51(2), pages 437-461, August.
  10. Nancy Birdsall, 2007. "Do No Harm: Aid, Weak Institutions, and the Missing Middle in Africa," Working Papers 113, Center for Global Development.
  11. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  12. McGillivray, Mark, 2006. "Aid Allocation and Fragile States," Working Paper Series DP2006/01, World Institute for Development Economic Research (UNU-WIDER).
  13. Simeon Djankov & José Garcia Montalvo & Marta Reynal-Querol, 2005. "The curse of aid," Economics Working Papers 870, Department of Economics and Business, Universitat Pompeu Fabra.
  14. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  15. Paul F. Whiteley, 2000. "Economic Growth and Social Capital," Political Studies, Political Studies Association, vol. 48(3), pages 443-466, 06.
  16. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
  17. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  18. William Easterly & Ross Levine & David Roodman, 2004. "Aid, Policies, and Growth: Comment," American Economic Review, American Economic Association, vol. 94(3), pages 774-780, June.
  19. Baliamoune-Lutz, Mina N. & Mavrotas, George, 2008. "Aid Effectiveness: Looking at the Aid-Social Capital-Growth Nexus," Working Paper Series RP2008/75, World Institute for Development Economic Research (UNU-WIDER).
  20. Patrick GUILLAUMONT & Lisa CHAUVET, 1999. "Aid and Performance: A Reassessment," Working Papers 199910, CERDI.
  21. Kilby, Christopher, 2005. "World Bank Lending and Regulation," Vassar College Department of Economics Working Paper Series 66, Vassar College Department of Economics.
  22. Clague, Christopher & Gleason, Suzanne & Knack, Stephen, 2001. "Determinants of lasting democracy in poor countries," MPRA Paper 28048, University Library of Munich, Germany.
  23. Dollar, David & Levin, Victoria, 2004. "Increasing selectivity of foreign aid, 1984-2002," Policy Research Working Paper Series 3299, The World Bank.
  24. Hansen, Henrik & Tarp, Finn, 2000. "Aid and Growth Regressions," MPRA Paper 62288, University Library of Munich, Germany.
  25. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
  26. Dollar, David & Svensson, Jakob, 2000. "What Explains the Success or Failure of Structural Adjustment Programmes?," Economic Journal, Royal Economic Society, vol. 110(466), pages 894-917, October.
  27. Vallings, Claire & Moreno-Torres, Magui, 2005. "Drivers Of Fragility: What Makes States Fragile?," PRDE Working Papers 12824, Department for International Development (DFID) (UK).
  28. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
  29. repec:tpr:qjecon:v:110:y:1995:i:3:p:681-712 is not listed on IDEAS
  30. Baliamoune-Lutz, Mina N. & McGillivray, Mark, 2008. "State Fragility: Concept and Measurement," Working Paper Series RP2008/44, World Institute for Development Economic Research (UNU-WIDER).
  31. Robert H. Bates, 2000. "Ethnicity and Development in Africa: A Reappraisal," American Economic Review, American Economic Association, vol. 90(2), pages 131-134, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:icr:wpicer:24-2007. 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: (Simone Pellegrino)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.