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Does foreign aid harm political institutions?

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  • Sam Jones
  • Finn Tarp

Abstract

The notion that foreign aid harms the institutions of recipient governments remains prevalent. We combine new disaggregated aid data and various metrics of political institutions to re-examine this relationship. Long-run cross-section and alternative dynamic panel estimators show a small positive net effect of total aid on political institutions. Distinguishing between types of aid according to their frequency domain and stated objectives, we find this aggregate net effect is driven primarily by the positive contribution of more stable inflows of 'governance aid'.

Suggested Citation

  • Sam Jones & Finn Tarp, 2015. "Does foreign aid harm political institutions?," WIDER Working Paper Series wp-2015-094, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2015-094
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