Aid, Growth, and Devolution: Considering Aid Modality and Different Types of Decentralization

Publikation: Beitrag in FachzeitschriftForschungsartikelBeigetragenBegutachtung

Beitragende

  • Christian Leßmann - , Technische Universität Braunschweig, Münchener Gesellschaft zur Förderung der Wirtschaftswissenschaft - CESifo GmbH, ifo Institut für Wirtschaftsforschung e.V. (Autor:in)
  • Gunther Markwardt - , Brandenburgische Technische Universität Cottbus-Senftenberg, Münchener Gesellschaft zur Förderung der Wirtschaftswissenschaft - CESifo GmbH (Autor:in)

Abstract

In this paper, we provide further evidence on the relationship between decentralization and foreign aid effectiveness. Our previous work has shown that decentralization decreases aid effectiveness, i.e., the impact of aid on economic growth is negative in decentralized countries. However, our previous work has not taken different types of aid and different types of decentralization into account, which is at the heart of our current analysis. We consider different measures of decentralization, in particular measures of fiscal decentralization derived from government finance statistics and measures of political decentralization that are constructed based on countries' constitutional rules. In addition, we take different types of aid into account: grants, loans, technical assistance, total net ODA; and we distinguish between multi-lateral and bi-lateral aid in order to consider differences in the donor structure. Our empirical analysis is based on panel data of up to 53 developing countries. In our growth regressions, we combine all types of decentralization with the different types of aid. We find important differences between different types of decentralization: (i) fiscal decentralization negatively affects aid effectiveness (in line with our previous work), (ii) employment decentralization may increase aid effectiveness, and (iii) political decentralization does not hamper aid effectiveness or may even have positive effects.

Details

OriginalspracheEnglisch
Seiten (von - bis)118-130
Seitenumfang13
FachzeitschriftWorld Development
Jahrgang84
PublikationsstatusVeröffentlicht - 1 Aug. 2016
Peer-Review-StatusJa
Extern publiziertJa

Externe IDs

Scopus 84964607641

Schlagworte

Schlagwörter

  • Decentralization, Foreign aid, Growth