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Aid and Human Development: Is There A Role for Good Policy Environment?

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  • Kar, Ashim Kumar

Abstract

This paper examines the role that official development assistance (ODA) plays in achieving human development outcomes in the presence of good policy environments. Using data from 96 low and middle-income countries for the period 1996-2014, the paper develops and tests static and dynamic panel data models controlling for potential endogeneity of aid and human development. In exploring the impacts of aid, indicators of economic, political and institutional governance were taken into account. With moderate differences across countries, results suggest that foreign aid is positively and significantly linked with, and hence facilitates, human development indicators. Also, the governance indicators influence human development. So, providing more aid is justified if better economic, political and institutional governance in the recipient countries can be ensured.

Suggested Citation

  • Kar, Ashim Kumar, 2016. "Aid and Human Development: Is There A Role for Good Policy Environment?," MPRA Paper 95433, University Library of Munich, Germany, revised 2018.
    • Handle: RePEc:pra:mprapa:95433
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    More about this item

    Keywords

    official development assistance (ODA); human development; governance; panel data; GMM estimation; dynamic panel data (DPD) model.;
    All these keywords.

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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