Is aid for infrastructure effective? A difference-in-difference-in-differences approach

Julian Donaubauer and Peter Nunnenkamp

No 2034, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The effects of foreign aid on the endowment of recipient countries with infrastructure have received surprisingly little attention in the empirical literature. This paper addresses this question by performing difference-in-difference-in-differences estimations, with the treatment defined as steep increases in aid for infrastructure since a distinct change in donor behavior in 2005. Mitigating endogeneity concerns in this way, we consistently find aid for infrastructure to be ineffective in improving the recipient countries' endowment with infrastructure. This finding holds not only for an encompassing index of economic infrastructure, but also for sub-indices of infrastructure in transportation, communication, energy, and finance.

Keywords: sector-specific aid; aid effectiveness; infrastructure; difference-in-difference-in-differences (search for similar items in EconPapers)
JEL-codes: F35 O18 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-dev and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Is Aid for Infrastructure Effective? A Difference-in-Difference-in-Differences Approach (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2034

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