Foreign aid, institutional quality and economic growth: Evidence from the developing world

Maruta, Admasu Asfaw; Banerjee, Rajabrata; Cavoli, Tony

doi:10.1016/j.econmod.2019.11.008

Cited by 86 publications

(61 citation statements)

References 82 publications

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“…Among the studies that discuss institutional quality and economic growth, many are indirect research. at is, the authors adopted an institutional environment as a control variable to analyze the effects of many variables, such as international aid, FDI, economic openness, resource endowment, and resource rents, on economic growth with different institutional qualities [21,[23][24][25][26]. Overall, these studies agree that a country with a good institutional environment is advantageous for economic subjects to absorb and use foreign aid, FDI, resource factors, and so on.…”

Section: Institutional Environmentmentioning

confidence: 99%

Institutional Environment and Green Economic Growth in China

Zhou

Wang

2021

Complexity

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As the answer to sustainability concerns, green economic growth has gradually attracted considerable attention. Notably, the optimization of the institutional environment contributes to green economic growth from the perspective of new institutional economics. However, few studies have systematically explained the connection between the institutional environment and green growth. In this study, the institutional environment was divided into three dimensions: governmental, legal, and cultural subenvironments. We adopted econometric models with the effect of every dimension on green growth and empirically analyzed with the generalized method of moments, based on Chinese provincial panel data from the years 2000–2016. The results indicated that there was an inverted U-shaped relationship between China’s institutional environment and its green growth. That is, the institutional environment can initially promote China’s green growth but, if it is not changed, will eventually inhibit it. In addition, the analysis on the three dimensions of the institutional environment highlighted that the role of the cultural subenvironment in green growth is greater than those of the governmental and legal subenvironments.

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Section: Institutional Environmentmentioning

confidence: 99%

Institutional Environment and Green Economic Growth in China

Zhou

Wang

2021

Complexity

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“…However, as we can see, our assumption of no constant relationship between institutions and economic growth is justified and suggested by the other authors as well. Maruta et al (2020) analyze the relationship between foreign aid, institutional quality, and economic growth for 74 developing countries in Africa, Asia, and South America. The study covers the 1980-2016 period.…”

Section: Literature Reviewmentioning

confidence: 99%

Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Bernardelli

Próchniak

Witkowski

2021

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Research background: It is not straightforward to identify the role of institutions for the economic growth. The possible unknown or uncertain areas refer to nonlinearities, time stability, transmission channels, and institutional complementarities. The research problem tackled in this paper is the analysis of the time stability of the relationship between institutions and economic growth and real economic convergence. Purpose of the article: The article aims to verify whether the impact of the institutional environment on GDP dynamics was stable over time or diffed in various subperiods. The analysis covers the EU28 countries and the 1995?2019 period. Methods: We use regression equations with time dummies and interactions to assess the stability of the impact of institutions on economic growth. The analysis is based on the partially overlapping observations. The models are estimated with the use of Blundell and Bond?s GMM system estimator. The results are then averaged with the Bayesian Model Averaging (BMA) approach. Structural breaks are identified on the basis of the Hidden Markov Models (HMM). Findings & value added: The value added of the study is threefold. First, we use the HMM approach to find structural breaks. Second, the BMA method is applied to assess the robustness of the outcomes. Third, we show the potential of HMM in foresighting. The results of regression estimates indicate that good institution reflected in the greater scope of economic freedom and better governance lead to the higher economic growth of the EU countries. However, the impact of institutions on economic growth was not stable over time.

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“…Importantly, if aid sending countries send aid in response to a certain observable recipient country characteristic (s), then aid will be endogenous. One way to address the endogeneity problem regarding aid is to use instrumental variable (IV) techniques relying on external instruments (see Maruta et al, 2020 ; Galiani et al, 2017 ). Others have used ordinary least squares (OLS) as well as a generalized method of moments (GMM) estimators (see Lensink and Morrissey, 2000 , Hansen and Tarp, 2001 , Gomanee et al, 2005 , Boone, 1994 , Boone, 1996 , Boone, 1996 ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Others have used ordinary least squares (OLS) as well as a generalized method of moments (GMM) estimators (see Lensink and Morrissey, 2000 , Hansen and Tarp, 2001 , Gomanee et al, 2005 , Boone, 1994 , Boone, 1996 , Boone, 1996 ). Maruta et al, (2020) instrumented foreign aid with recipient and donor countries similar voting positions in the UN General Assembly. Galiani et al (2017) instrumented general foreign aid based on the fact that, since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income.…”

Section: Literature Reviewmentioning

confidence: 99%

Aid to Africa’s agriculture towards building physical capital: Empirical evidence and implications for post-COVID-19 food insecurity

Asiedu

Sadekla

Bokpin

2020

World Development Perspectives

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Highlights Africa’s agricultural productivity depends on the formation of physical capital. Capital formation is imperative to overcome potential post COVID-19 food insecurity. Instantaneous impact of agricultural ODA on agricultural fixed capital formation. Corruption and rule of law do matter for agricultural ODA inflows to SSA. ODA is necessary to accelerate agricultural investments and enhance food security.

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Foreign aid, institutional quality and economic growth: Evidence from the developing world

Cited by 86 publications

References 82 publications

Institutional Environment and Green Economic Growth in China

Institutional Environment and Green Economic Growth in China

Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Aid to Africa’s agriculture towards building physical capital: Empirical evidence and implications for post-COVID-19 food insecurity

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