Geopolitics, aid and growth

• Verfasst von: Dreher, Axel
• Verfasst von: Eichenauer, Vera
• Verfasst von: Gehring, Kai
• Titel: Geopolitics, aid and growth
• Verf.angabe: Axel Dreher; Vera Eichenauer; Kai Gehring
• Verlagsort: Heidelberg
• Verlag: Universitätsbibliothek Heidelberg
• Jahr: 2014
• Umfang: Online-Ressource (48 S.)
• Gesamttitel/Reihe: Discussion Paper Series / University of Heidelberg, Department of Economics ; 575
• URN: urn:nbn:de:bsz:16-heidok-175459
• Datenträger: Online-Ressource
• Sprache: eng
• K10plus-PPN: 1659408679
• K10plus-PPN:
  Universitätsbibliothek
• Lokale URL UB: Zum Volltext

Abstract

We investigate the effects of short-term political motivations on the effectiveness of foreign aid. Specifically, we test whether the effect of aid on economic growth is reduced by the share of years a country has served on the United Nations Security Council (UNSC) in the period the aid has been committed, which provides quasi-random variation in aid. Our results show that the relationship of aid with growth is significantly lower when aid has been committed during a country’s tenure on the UNSC. We derive two conclusions from this. First, short-term political favoritism reduces growth. Second, political interest variables are inadequate as instruments for overall aid, raising doubts about a large number of results in the aid effectiveness literature.