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The Effectiveness of Aid in Improving Regulations: Empirical evidence and the drivers of change in Rwanda

Author

Listed:
  • Busse, Matthias
  • Hoekstra, Ruth
  • Osei, Robert D.

Abstract

The paper assesses the impact of foreign aid on the change in the quality of regulations, and identifies the drivers of this change in a case study on Rwanda. In the empirical analysis, we find that highly targeted Aid for Business has a significantly positive impact on regulations across developing countries, but we do not find any effects for overall aid or aid directed at broad governance areas. In the country case study, we depart from Rwanda's excellent regulatory performance to explain how aid is effective in changing the regulatory environment, driven by the country's strong political leadership and its singular institutional history.

Suggested Citation

  • Busse, Matthias & Hoekstra, Ruth & Osei, Robert D., 2013. "The Effectiveness of Aid in Improving Regulations: Empirical evidence and the drivers of change in Rwanda," IEE Working Papers 198, Ruhr University Bochum, Institute of Development Research and Development Policy (IEE).
    • Handle: RePEc:zbw:ieewps:198
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    More about this item

    Keywords

    Foreign aid; Governance; Business regulations; Rwanda;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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