AID, ECONOMIC FREEDOM, AND GROWTH |
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| Authors: | JAC C. HECKELMAN STEPHEN KNACK |
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| Affiliation: | Heckelman:;Reinsch/Pierce Faculty Fellow and Professor of Economics, Wake Forest University, 110 Carswell Hall, Winston-Salem, NC 27109. Phone 336-758-5923, E-mail
Knack:;Lead Economist, World Bank, Washington, DC 20433. Phone 202-458-9712, Fax 202-522-1154, E-mail |
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| Abstract: | Foreign aid has often been intended by donors to entice recipient nations into policy and institutional reforms favorable to private sector economic development. In this study, we investigate the relationship between aid and changes to economic freedom in recipient nations over the 1990–2000 decade. The evidence is mixed. In general, we find that foreign aid has no significant effect on economic freedom overall. However, using a hedonic approach on the different categories of economic freedom, we find that aid has still managed to contribute toward a policy and institutional environment favorable to growth, as the different categories of economic freedom improved by aid more than offset those which are harmed by aid, in terms of their impact on growth . ( JEL 010, 019) |
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