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Government Ideology in Donor and Recipient Countries: Does Political Proximity Matter for the Effectiveness of Aid?

Author

Listed:
  • Axel Dreher
  • Anna Minasyan
  • Peter Nunnenkamp

Abstract

Political proximity between donor and recipient governments may impair the effectiveness of aid by encouraging favoritism. By contrast, political misalignment between donor and recipient governments may render aid less effective by adding to transaction costs and giving rise to incentive problems. We test these competing hypotheses empirically by considering the political ideology of both governments along the left-right spectrum in augmented models on the economic growth effects of aid. Following the estimation approach of Clemens et al. (2012), we find that aid tends to be less effective when political ideology differs between the donor and the recipient

Suggested Citation

  • Axel Dreher & Anna Minasyan & Peter Nunnenkamp, 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.
  • Handle: RePEc:kie:kieliw:1870
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    File URL: https://www.ifw-members.ifw-kiel.de/publications/government-ideology-in-donor-and-recipient-countries-does-political-proximity-matter-for-the-effectiveness-of-aid/KWP_1870.pdf
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    More about this item

    Keywords

    aid effectiveness; economic growth; politics and aid; government ideology;

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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