Aid and Growth at the Regional Level
By Axel Dreher, S. Lohmann. Social Science Research Network, 2015
116 citations recorded by the source corpus.
This paper brings the aid effectiveness debate to the sub-national level. We hypothesize the non-robust results regarding the effects of aid on development in the previous literature to arise due to the effects of aid being insufficiently large to measurably affect aggregate outcomes. Using geo-coded data for World Bank aid to a maximum of 2,221 first-level administrative regions (ADM1) and 54,167 second-level administrative regions (ADM2) in 130 countries over the 2000-2011 period, we test whether aid affects development, measured as nighttime light growth. Our preferred identification strategy exploits variation arising from interacting a variable that indicates whether or not a country has passed the threshold for receiving IDA's concessional aid with a recipient region's probability to receive aid, in a sample of 478 ADM1 regions and almost 8,400 ADM2 regions from 21 countries. Controlling for the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Overall, we find significant correlations between aid and growth in ADM2 regions, but no causal effects.
Subfields: Development, Economics and Econometrics, Safety Research
View Paper: https://www.semanticscholar.org/paper/9638baf12514b177cc28292cbc919a91a9e776b1
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Citations in the corpus
- Racing to the bottom? Chinese development projects and trade union involvement in Africa (2018, background): “Considering that the geographical coding precision tends to reflect the sectoral composition of aid (Dreher and Lohmann, 2015), the mere fact that we focus on projects with equally precise geocodes arguably makes the selection of Chinese and World Bank projects more comparable.”
- Development aid and infant mortality. Micro-level evidence from Nigeria (2018, background): “Second, the lack of robust results regarding the effects of aid on development could arguably be a result of the effects of aid being too small and localized to affect aggregate outcomes (Briggs, 2017; Dreher & Lohmann, 2015).”
- Aid and growth: New evidence using an excludable instrument (2020, unknown): “Dreher and Lohmann (2015) focus on regional growth within countries.”
- Chinese aid and local corruption (2018, unknown): “geographical coding precision tends to reflect the sectoral composition of aid (Dreher and Lohmann, 2015), the mere fact that we focus on projects with equally precise geocodes should”
- Aid on Demand: African Leaders and the Geography of China's Foreign Assistance (2015, unknown): “In total, about 40 percent of all projects are assigned to a distinguishable location (Dreher and Lohmann 2015).”