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Who Gives Foreign Aid to Whom and Why
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The authors found that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients, and that countries that democratize receive more aid, ceteris paribus.Abstract:
This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients. Colonial past and political alliances are the major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond more to political variables, foreign direct investments are more sensitive to economic incentives, particularly property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.read more
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Aid and growth regressions
Henrik Hansen,Finn Tarp +1 more
TL;DR: This article examined the relationship between foreign aid and growth in real GDP per capita as it emerges from simple augmentations of popular cross-country growth specifications and found that aid in all likelihood increases the growth rate, and this result is not conditional on good policy.
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Aid Allocation and Poverty Reduction
David Dollar,Paul Collier +1 more
TL;DR: In this article, Collier and Dollar derive a poverty-efficient allocation of aid and compare it with actual aid allocations, and find that aid is targeted disproportionately to countries with severe poverty and adequate policies -the type of countries where 74 percent of the world's poor live.
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Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment
TL;DR: For example, this article found that democratic countries attract as much as 70 percent more FDI than their authoritarian counterparts, and that democratic political systems attract higher levels of FDI inflows both across countries and within countries over time.
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On the Empirics of Foreign Aid and Growth
TL;DR: In this article, the authors re-examine the effectiveness of foreign aid theoretically and empirically using a standard OLG model and show that aid inflows will in general affect long-run productivity.
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Aid and Growth: What Does The Cross-Country Evidence Really Show?
TL;DR: This article examined the effects of aid on growth in cross-sectional and panel data after correcting for the bias that aid typically goes to poorer countries, or to countries after poor performance, and found little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth.
References
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Economic Reform and the Process of Global Integration
TL;DR: The World Trade Organization (WTO) was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible as mentioned in this paper, and the agreement included a codification of basic principles governing trade in goods and services.
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Aid, Policies, and Growth
TL;DR: Burnside and Dollar as mentioned in this paper used a new database on foreign aid to examine the relationships among foreign aid, economic policies, and growth of per capita GDP and found that aid has a positive impact on growth in developing countries with good fiscal, monetary, and trade policies.
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Democracy and Growth
TL;DR: Growth and democracy are analyzed for a panel of about 100 countries from 1960 to 1990 as mentioned in this paper, showing that the overall effect of democracy on growth is weakly negative and there is a suggestion of a nonlinear relationship in which more democracy enhances growth at low levels of political freedom but depresses growth when a moderate level of freedom has already been attained.
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Politics and the Effectiveness of Foreign Aid
TL;DR: This paper analyzed the effectiveness of foreign aid programs to gain insights into political regimes in aid recipient countries and found that the impact of aid does not vary according to whether recipient governments are liberal democracies or highly repressive.