Ethnic Fractionalization and Aid Effectiveness

Roland Hodler & David S. Knight
Authors registered in the RePEc Author Service: Roland Hodler

No 1082, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: We test the hypothesis that the effect of foreign aid on economic growth is positive in ethnically homogenous countries, but decreasing in ethnic fractionalization. Using panel data covering 114 aid recipient countries over the period 1962 to 2001, and employing two-stage least squares and GMM estimation techniques, we find strong support for this hypothesis. Our estimates suggest that foreign aid may have retarded economic growth in many fractionalized countries, most of which are located in Sub-Saharan Africa.

Keywords: Foreign aid; ethnic fractionalization; economic growth (search for similar items in EconPapers)
JEL-codes: C23 F35 F43 O11 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009
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Related works:
Journal Article: Ethnic Fractionalisation and Aid Effectiveness (2012)
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