Does state capacity matter for foreign aid effectiveness? Panel data evidence on water from 87 countries

Masood Ahmed

Water International, 2020, vol. 45, issue 5, 479-496

Abstract: This study attempts to measure how the effectiveness of aid to the drinking water sector is mediated by state capacity. I use panel data on a sample of 87 aid-receiving countries, with the Bureaucratic Quality Index as a measure of state capacity. Employing random effects, fixed effects, and system GMM techniques, the study empirically and robustly finds that state capacity does not have a significant positive mediating impact on aid effectiveness in increasing access to improved water sources. I also find that the mediating impact of state capacity is contingent on the level of democracy in aid-receiving countries.

Date: 2020
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DOI: 10.1080/02508060.2020.1774317

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