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Forced to Freedom? Empirical relations between aid and economic freedom

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  • Kronthaler, Franz
  • Knedlik, Tobias

Abstract

The paper explores the relationships between economic freedom on the one side and development aid and IMF credit as approximation for conditional aid on the other side. After a short review of current literature the paper develops a simple panel regression model to evaluate the relationships. In contrast to previous research, our results allow the rejection of the hypothesis that IMF credit increases economic freedom and that development aid is not contributing to economic freedom. It could not be shown that countries can be forced to economic freedom by aid conditions. The paper discusses explanations of the empirical findings.

Suggested Citation

  • Kronthaler, Franz & Knedlik, Tobias, 2007. "Forced to Freedom? Empirical relations between aid and economic freedom," Proceedings of the German Development Economics Conference, Göttingen 2007 19, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec07:6542
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    References listed on IDEAS

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    More about this item

    Keywords

    Aid receiving countries; economic freedom; development aid; IMF credit;

    JEL classification:

    • P10 - Economic Systems - - Capitalist Systems - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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