Work

Ethnic Fractionalisation and Aid Effectiveness

Year: 2011

Type: article

Abstract: We test the hypothesis that the effect of foreign aid on economic growth is positive in ethnically homogenous countries, but decreasing in ethnic fractionalisation. Using panel data covering 114 aid-recipient countries over the period 1962 to 2001, and employing two-stage least squares and GMM estimation techniques, we find a strong support for this hypothesis. Our estimates suggest that foreign aid promotes growth in ethnically homogenous countries, while being ineffective or even harmful in many Sub-Saharan African countries and some ethnically fractionalised countries elsewhere.

Source: Journal of African Economies

DOI: 10.1093/jae/ejr036

Authors: R. Hodler, D. S. Knight

Institutions: University of Lucerne, The University of Melbourne

Language: English

Topic: International Development and Aid

Subfield: Development

Field: Social Sciences

Domain: Social Sciences

SDGs: Reduced inequalities, Partnerships for the goals, Decent work and economic growth

Open Access status: green

Funders: University of Pennsylvania, University of Melbourne