Aid, policies, and growth : revisiting the evidence

By A. C. Burnside, David L. Dollar. 2004

503 citations recorded by the source corpus.

The authors revisit the relationship between aid and growth using a new data set focusing on the 1990s. The evidence supports the view that the impact of aid depends on the quality of state institutions and policies. The authors use an overall measure of institutions and policies popular in the empirical growth literature. The interaction of aid and institutional quality has a robust positive relationship with growth that is strongest in instrumental variable regressions. There is no support for the competing hypothesis that aid has the same positive effect everywhere.The authors also show that in the 1990s the allocation of aid to low-income countries favored those with better institutional quality. This"selectivity"is sensible if aid in fact is more productive in sound institutional and policy environments. The cross-country evidence on aid effectiveness is supported by other types of information as well: case studies, project-level evidence, and opinion polls support the view that corrupt institutions and weak policies limit the impact of financial assistance for development.

Subfields: Development, Information Systems, Safety Research

View Paper: https://www.semanticscholar.org/paper/b5b975ff51085b825abd3ac3f0c9d266cd9ffcbf

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Citations in the corpus

China & India as Africa's New Donors: The Impact of Aid on Development (2008, background): “The impact of aid received has been shown to depend on conditions such as the state of civil liberties in the country, the policy environment, institutional quality, peace and stability, and several other variables (Burnside and Dollar, 2004 ; World Bank, 1998 ; Radelet, 2006 ; Isham et al.”
Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth* (2012, unknown): “1 Other work in this vein has tested whether or not the aid–growth effect is conditional on export price shocks (Collier and Dehn, 2001); climatic shocks and trends and volatility in the terms of trade (Guillaumont and Chauvet, 2001; Chauvet and Guillaumont, 2004); policy and institutional quality (”
Does Aid for Education Educate Children? Evidence from Panel Data (2006, unknown): “…In a subsequent paper, the same authors justify this by claiming that “researchers coming from the left, the right, and the center have all concluded that aid as traditionally practiced has not had systematic, beneficial effects on institutions and policies” (Burnside and Dollar 2004: 4).”
The use (and abuse) of governance indicators in economics: a review (2008, background): “Burnside and Dollar 2004 ICRG; Freedom House Political Liberties; Kaufmann et al (1999) governance dataset 124 1980-89, 1990-99 OLS / 2SLS Aid generally works better in countries with better institutions, but occasionally this link is not significant.”
The Anarchy of Numbers (2007, background): “There are other third-generation studies (Hadjimichael et al. 1995; Durbarry, Gemmell, and Greenaway 1998; Lensink and White 2001; Svensson 1999; Chauvet and Guillaumont 2002; Burnside and Dollar 2004).”
Why Do Aid Agencies Exist (2005, unknown): “This stands in stark contrast to the growing volume of research on the (in)effectiveness of aid (for instance Burnside & Dollar, 2000, 2004; Hansen & Tarp, 2000, 2001).”
It Works; It Doesn't; It Can, But That Depends (2006, background): “In one paper (Burnside and Dollar 2004a), they directly respond to the criticism brought forward by Easterly et al. (2004).”
Are international databases on corruption reliable? A comparison of expert opinion surveys and household surveys in sub-Saharan Africa (2010, background): “The concept now guides many donors more or less directly, as shown by an entire series of empirical studies on aid allocation criteria (Berthélémy and Tichit, 2004; Burnside and Dollar, 2004; Dollar and Levine, 2004).”
Does Conditionality Work? A Test for an Innovative US Aid Scheme (2011, unknown): “Unfortunately, it does no such thing” (Collier 1997: 56). The example of Kenya has repeatedly been used to demonstrate the failure of traditional conditionality in international development cooperation (Collier 1997; Svensson 2003). Kenya has outmaneuvered even major donors such as the World Bank. T”