Economics at your fingertips  

The Political Economy of Foreign Aid and Growth:Theory and Evidence

Sultan Mehmood () and Avner Seror ()
Additional contact information
Sultan Mehmood: University of Paris - IX

Working Papers from Chapman University, Economic Science Institute

Abstract: In this paper, we demonstrate that even when foreign aid is used to fund patronage, it may still have a positive - and significant - effect on economic growth in developing countries. First, we present a theory that formalizes the effect of aid on economic growth and patronage. Next, we provide evidence from Pakistan consistent with the predictions of the model that foreign aid increases economic growth, despite being used for patronage. The identification strategy we propose allows us to provide causal evidence for the predictions of the model.

Keywords: Foreign aid; Economic growth; Political Economy; Patronage (search for similar items in EconPapers)
JEL-codes: F35 D72 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-gro, nep-int and nep-pol
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Chapman University, Economic Science Institute Contact information at EDIRC.
Bibliographic data for series maintained by Megan Luetje ().

Page updated 2019-10-14
Handle: RePEc:chu:wpaper:19-10