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2016 | OriginalPaper | Buchkapitel

3. Assessing Aid: Conceptual and Methodological Issues

verfasst von : Jonathan Glennie, Andy Sumner

Erschienen in: Aid, Growth and Poverty

Verlag: Palgrave Macmillan UK

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Abstract

In this chapter we discuss issues of methodology related to aid effectiveness studies with a focus on causality and bias. We discuss the methodological issues emerging from the aid effectiveness literature.

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Fußnoten
1
According to OECD-Development Assistance Committee (DAC) (2014: 3), concessional development finance in 2012 for DAC plus other reporting countries was $133.4bn and non-reporting countries was a further $5.1bn making $138.5bn. One problem which illustrates some of the discussion in this section is that ODA aid figures exclude NGO (Non-Governmental Organisation) and foundation aid except that which is funded by ODA.
 
2
See also Riddell (2007, 2014).
 
3
As we explain later, we define ‘aid’ as ODA on the basis that it accounts for the overwhelming majority of aid.
 
4
Further, the data used—net ODA—includes emergency/humanitarian aid which is likely to be proportionally more important in fragile and conflict-affected states.
 
5
Take for example, Dutch disease (aid inflows lead to exchange rate depreciation and loss of competitiveness and falling export earnings, possibly outweighing the aid inflow in value). Dutch disease can be misleading as it is very static (economies move around a given production possibility frontier between tradables and non-tradables). Aid is rather about investments that move the frontier out over time. Further, the evidence on the existence of Dutch disease is very mixed and will depend on the level of aid, the host economy, and so forth. If aid is invested in reducing transactions costs (e.g. better roads), health and education (e.g. better human capital), then it becomes cheaper to produce (per unit); then any appreciation of the exchange rate matters less so (and in any case will tend to occur as economies grow). Selaya and Thiele (2010) find no empirical support for the idea that aid tends to encourage Dutch disease. However, Rajan and Subramanian (2011) do find substantial Dutch disease effects of aid.
 
6
Here we discuss these issues in a general sense—later in the book we refer specifically to econometrics.
 
7
See later discussion on this with reference to econometrics.
 
8
Poorer countries tend to get more aid per capita and this “allocation effect’ tends to bias estimates of aid’s impact in a negative direction (Dalgaard and Hansen 2009). The standard practice (other than randomised controlled trials) is to use instrumental variable regressions in an attempt to identify exogenous variation in aid, and hence be able to infer a causal effect of aid (see discussion of Bazzi and Clemens 2013). See also Carter (2014) for discussion of the standard empirical methods employed in the study of foreign aid and the potential for misleading results concerning the object of interest—the long-run impact of aid.
 
9
They find that crossing the IDA threshold slows growth and that is likely due to aid. Once this is taken into account, they find with a sample of just 35 countries that after passing the threshold, every 1 % of aid/GNI raises income per person by a third of a percentage point. A further promising approach is that by Temple and Van de Sijpe (2014).
 
10
They find a positive effect that is only statistically significant at the 10 % level, and is only externally valid for countries that receive aid from major oil exporters.
 
11
Thanks to Mark McGillivray for this observation (and others).
 
12
See also Pawson (2006) and White (1992).
 
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Metadaten
Titel
Assessing Aid: Conceptual and Methodological Issues
verfasst von
Jonathan Glennie
Andy Sumner
Copyright-Jahr
2016
DOI
https://doi.org/10.1057/978-1-137-57272-1_3