Foreign Aid and Market-Liberalizing Reform

Market-oriented economic policies-reflected in limited economic activity by government, protection of private property rights, sound monetary policy, outward orientation regarding trade and efficient tax and regulatory policy-have been strongly linked to faster rates of economic growth. Foreign aid...

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Main Authors:	Heckelman, Jac, Knack, Stephen
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ADVERSE CONSEQUENCES ADVERSE EFFECTS AID AID ALLOCATION AID FLOWS AID PROGRAMS AID/GNI CONDITIONALITY CRISES DEBT DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICIES EMPIRICAL ANALYSIS EMPIRICAL STUDIES EMPLOYMENT FINANCIAL INSTITUTIONS FOURTH GOVERNMENT GOVERNMENT EXPENDITURES INCOME INFLATION INTERNATIONAL DEVELOPMENT MARKET ECONOMIES MARKET LIBERALIZATION MONETARY POLICY MORTALITY NATIONAL INCOME POLICY ENVIRONMENT POLITICAL ECONOMY POLITICAL INSTITUTIONS PRIVATE PROPERTY PROPERTY RIGHTS PROTECTION PUBLIC GOODS PURCHASING POWER RENTS STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT LOANS STRUCTURAL ADJUSTMENT PROGRAMS TECHNICAL ASSISTANCE TERMS OF TRADE TRADE TAXES WORLD DEVELOPMENT INDICATORS
Online Access:	http://documents.worldbank.org/curated/en/2005/04/5724087/foreign-aid-market-liberalizing-reform http://hdl.handle.net/10986/8971

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recordtype	oai_dc
spelling	okr-10986-89712021-04-23T14:02:42Z Foreign Aid and Market-Liberalizing Reform Heckelman, Jac Knack, Stephen ACCOUNTING ADVERSE CONSEQUENCES ADVERSE EFFECTS AID AID ALLOCATION AID FLOWS AID PROGRAMS AID/GNI CONDITIONALITY CRISES DEBT DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICIES EMPIRICAL ANALYSIS EMPIRICAL STUDIES EMPLOYMENT FINANCIAL INSTITUTIONS FOURTH GOVERNMENT GOVERNMENT EXPENDITURES INCOME INFLATION INTERNATIONAL DEVELOPMENT MARKET ECONOMIES MARKET LIBERALIZATION MONETARY POLICY MORTALITY NATIONAL INCOME POLICY ENVIRONMENT POLITICAL ECONOMY POLITICAL INSTITUTIONS PRIVATE PROPERTY PROPERTY RIGHTS PROTECTION PUBLIC GOODS PURCHASING POWER RENTS STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT LOANS STRUCTURAL ADJUSTMENT PROGRAMS TECHNICAL ASSISTANCE TERMS OF TRADE TRADE TAXES WORLD DEVELOPMENT INDICATORS Market-oriented economic policies-reflected in limited economic activity by government, protection of private property rights, sound monetary policy, outward orientation regarding trade and efficient tax and regulatory policy-have been strongly linked to faster rates of economic growth. Foreign aid is often provided in the belief that it encourages liberalizing reforms in these areas. This paper analyzes the impact of aid on market-liberalizing policy reform, correcting for the possible endogeneity of aid. Results indicate that higher aid slowed reform over the 1980-2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is significantly linked to slower reform in some policy areas but not in others. Disaggregating by decade, aid's adverse impact on policy reform is much more pronounced for the 1980s than for the 1990s. 2012-06-25T21:13:52Z 2012-06-25T21:13:52Z 2005-04 http://documents.worldbank.org/curated/en/2005/04/5724087/foreign-aid-market-liberalizing-reform http://hdl.handle.net/10986/8971 English Policy Research Working Paper; No. 3557 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ADVERSE CONSEQUENCES ADVERSE EFFECTS AID AID ALLOCATION AID FLOWS AID PROGRAMS AID/GNI CONDITIONALITY CRISES DEBT DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICIES EMPIRICAL ANALYSIS EMPIRICAL STUDIES EMPLOYMENT FINANCIAL INSTITUTIONS FOURTH GOVERNMENT GOVERNMENT EXPENDITURES INCOME INFLATION INTERNATIONAL DEVELOPMENT MARKET ECONOMIES MARKET LIBERALIZATION MONETARY POLICY MORTALITY NATIONAL INCOME POLICY ENVIRONMENT POLITICAL ECONOMY POLITICAL INSTITUTIONS PRIVATE PROPERTY PROPERTY RIGHTS PROTECTION PUBLIC GOODS PURCHASING POWER RENTS STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT LOANS STRUCTURAL ADJUSTMENT PROGRAMS TECHNICAL ASSISTANCE TERMS OF TRADE TRADE TAXES WORLD DEVELOPMENT INDICATORS
spellingShingle	ACCOUNTING ADVERSE CONSEQUENCES ADVERSE EFFECTS AID AID ALLOCATION AID FLOWS AID PROGRAMS AID/GNI CONDITIONALITY CRISES DEBT DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICIES EMPIRICAL ANALYSIS EMPIRICAL STUDIES EMPLOYMENT FINANCIAL INSTITUTIONS FOURTH GOVERNMENT GOVERNMENT EXPENDITURES INCOME INFLATION INTERNATIONAL DEVELOPMENT MARKET ECONOMIES MARKET LIBERALIZATION MONETARY POLICY MORTALITY NATIONAL INCOME POLICY ENVIRONMENT POLITICAL ECONOMY POLITICAL INSTITUTIONS PRIVATE PROPERTY PROPERTY RIGHTS PROTECTION PUBLIC GOODS PURCHASING POWER RENTS STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT LOANS STRUCTURAL ADJUSTMENT PROGRAMS TECHNICAL ASSISTANCE TERMS OF TRADE TRADE TAXES WORLD DEVELOPMENT INDICATORS Heckelman, Jac Knack, Stephen Foreign Aid and Market-Liberalizing Reform
relation	Policy Research Working Paper; No. 3557
description	Market-oriented economic policies-reflected in limited economic activity by government, protection of private property rights, sound monetary policy, outward orientation regarding trade and efficient tax and regulatory policy-have been strongly linked to faster rates of economic growth. Foreign aid is often provided in the belief that it encourages liberalizing reforms in these areas. This paper analyzes the impact of aid on market-liberalizing policy reform, correcting for the possible endogeneity of aid. Results indicate that higher aid slowed reform over the 1980-2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is significantly linked to slower reform in some policy areas but not in others. Disaggregating by decade, aid's adverse impact on policy reform is much more pronounced for the 1980s than for the 1990s.
format	Publications & Research :: Policy Research Working Paper
author	Heckelman, Jac Knack, Stephen
author_facet	Heckelman, Jac Knack, Stephen
author_sort	Heckelman, Jac
title	Foreign Aid and Market-Liberalizing Reform
title_short	Foreign Aid and Market-Liberalizing Reform
title_full	Foreign Aid and Market-Liberalizing Reform
title_fullStr	Foreign Aid and Market-Liberalizing Reform
title_full_unstemmed	Foreign Aid and Market-Liberalizing Reform
title_sort	foreign aid and market-liberalizing reform
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/04/5724087/foreign-aid-market-liberalizing-reform http://hdl.handle.net/10986/8971
_version_	1764407175786004480

Foreign Aid and Market-Liberalizing Reform

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