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Aid and institutions in transition economies

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  • Askarov, Zohid
  • Doucouliagos, Hristos

Abstract

We investigate whether aid contributed to institutional development in transition economies. We find that aid flows have a positive effect on democratization, especially on constraints on the executive and political participation. At the same time, total aid has no effect on overall quality of governance, while US aid appears to have a negative impact on some dimensions of governance. Aid’s differential impact on democracy and governance is consistent with uneven development of institutions and the democracy consolidation hypothesis. We also find that aid has a non-linear effect on democracy. Openness has a positive effect on both democracy and good governance. Oil resources have an adverse effect on democracy. Adult mortality, civil war and adherence to Islam are all detrimental to good governance.

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  • Askarov, Zohid & Doucouliagos, Hristos, 2015. "Aid and institutions in transition economies," European Journal of Political Economy, Elsevier, vol. 38(C), pages 55-70.
    • Handle: RePEc:eee:poleco:v:38:y:2015:i:c:p:55-70
    DOI: 10.1016/j.ejpoleco.2015.01.001
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    4. Valeria A. Arsenyevа & Svetlana A. Litvinova & Valentina N. Parakhina & Zinaida N. Kozenko & Mikhail Y. Denisov, 2016. "Innovational Development for Transitional Economy – Russia Case Study," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 10(4), December.
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    6. Nikolova, Milena, 2016. "Minding the happiness gap: Political institutions and perceived quality of life in transition," European Journal of Political Economy, Elsevier, vol. 45(S), pages 129-148.
    7. Islam, Md. Rabiul & Madsen, Jakob B. & Raschky, Paul A., 2015. "Gold and silver mining in the 16th and 17th centuries, land titles and agricultural productivity," European Journal of Political Economy, Elsevier, vol. 39(C), pages 150-166.
    8. Arif, Imran & Hall, Joshua C., 2019. "International flows of people and institutional change," European Journal of Political Economy, Elsevier, vol. 58(C), pages 276-288.
    9. Gnangnon, Sèna Kimm, 2021. "Effect of Development Aid on Productive Capacities," EconStor Preprints 233973, ZBW - Leibniz Information Centre for Economics.
    10. Dzhumashev, Ratbek & Hailemariam, Abebe, 2021. "Foreign aid and the quality of economic institutions," European Journal of Political Economy, Elsevier, vol. 68(C).
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    More about this item

    Keywords

    Aid; Institutions; Democracy; Governance;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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