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The Dynamics of Aid and Political Rights

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  • David Fielding

    () (Department of Economics, University of Otago)

Abstract

Several existing papers explore the extent to which the cross-country variation in measures of democracy and political rights can be explained by the cross-country variation in foreign aid inflows. Using panel data, we explore the extent to which the variation over time in such measures can be explained by changes in aid inflows, thus providing direct evidence on the impact of innovations in donor policy, and distinguishing between the short-run and long-run effects of changes in aid. Our results are very different from those based on cross-country variation in aid inflows. We find evidence of large differences between the effect of aggregate aid and the effect of aid for political reform, and between the effects in countries at different stages of political development. There is no evidence that aid intended for political reform has achieved its objective, and in some countries it may be counter-productive. However, aggregate aid can have a beneficial effect on political rights.

Suggested Citation

  • David Fielding, 2011. "The Dynamics of Aid and Political Rights," Working Papers 1102, University of Otago, Department of Economics, revised Apr 2011.
  • Handle: RePEc:otg:wpaper:1102
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    File URL: http://www.otago.ac.nz/economics/research/otago076658.pdf
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    References listed on IDEAS

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    1. David Strömberg, 2007. "Natural Disasters, Economic Development, and Humanitarian Aid," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 199-222, Summer.
    2. Busse, Matthias & Gröning, Steffen, 2009. "Does foreign aid improve governance?," Economics Letters, Elsevier, vol. 104(2), pages 76-78, August.
    3. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    4. Öhler, Hannes & Nunnenkamp, Peter & Dreher, Axel, 2012. "Does conditionality work? A test for an innovative US aid scheme," European Economic Review, Elsevier, vol. 56(1), pages 138-153.
    5. Tavares, Jose, 2003. "Does foreign aid corrupt?," Economics Letters, Elsevier, vol. 79(1), pages 99-106, April.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Sarantis Kalyvitis & Irene Vlachaki, 2010. "Democratic Aid And The Democratization Of Recipients," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 188-218, April.
    8. David Fielding, 2011. "Health aid and governance in developing countries," Health Economics, John Wiley & Sons, Ltd., vol. 20(7), pages 757-769, July.
    9. Abdiweli M. Ali & Hoden Said Isse, 2003. "Determinants of Economic Corruption: A Cross-Country Comparison," Cato Journal, Cato Journal, Cato Institute, vol. 22(3), pages 449-466, Winter.
    10. Monica Escaleras & Nejat Anbarci & Charles Register, 2007. "Public sector corruption and major earthquakes: A potentially deadly interaction," Public Choice, Springer, vol. 132(1), pages 209-230, July.
    11. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
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    1. repec:bla:worlde:v:40:y:2017:i:5:p:906-930 is not listed on IDEAS

    More about this item

    Keywords

    Aid; political rights; dynamic panel model;

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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