The Egalitarian Impact of Aid on Some Latin American Countries

González, Mariano; Ramos, José María Larrú

doi:10.15640/jeds.v2n4a10

Cited by 2 publications

(2 citation statements)

References 31 publications

(23 reference statements)

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“…We found that total aid increases income inequality (column 1, Table 2) showing support for the findings of Ali and Ahmad (2013), Bjørnskov (2010), Gonzalez and Larru (2012), Herzer and Nunnenkamp (2012), and Tezanos et al (2013). However, apart from social aid and multi-sector aid, all the other types of aid have a negative relationship with income inequality, showing that aid to the production sector, economic sector, and humanitarian aid reduce income inequality in the recipient countries.…”

Section: Resultssupporting

confidence: 84%

“…For example, Bjørnskov (2010) for 88 countries over the period 1960-2000 found a positive relationship between aid and inequality in democracies, but in nondemocratic settings, the effect was insignificant. Similarly, Herzer and Nunnenkamp (2012) for 21 countries, Ali and Ahmad (2013) for Pakistan and Gonzalez andLarru (2012), andTezanos et al (2013) for Latin American countries show a positive relationship between foreign aid and income inequality whereas Chong et al (2009) did not find significant relationship for a large pool of countries. Briggs (2017) examine the extent to which foreign aid reaches people at different levels of wealth in Africa, using household surveys to measure the sub-national distribution of a country's population by levels of wealth and by matching this information to data about the location of aid projects from two multilateral donors.…”

Section: Literature Reviewmentioning

confidence: 92%

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The relationship between foreign aid and income inequality and the role of corruption

Maqbool

Ali²

2021

Journal of Public Affairs

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In this paper, we reassess the relationship between foreign aid and income inequality. The existing literature provides mixed evidence at best on the direction, magnitude, and significance of the relationship between foreign aid and income inequality. We contribute to the literature on this topic by differentiating between types of foreign aid namely: economic, social, production, multi‐sector, and humanitarian aid to determine which types of foreign aid reduce income inequality in recipient countries after accounting for endogeneity bias using generalized method of moments estimation method. We also study the role of control of corruption in the aid‐inequality relationship. The study uses panel data comprising of 78 recipient countries for the last 14 years. We found that an increase in total aid increases income inequality, however, when we differentiate among types of aid, we found that the economic sector, production sector, and humanitarian aid decrease income inequality, multi‐sector increases income inequality while social aid does not have any impact on income inequality. Moreover, we found that foreign aid has a negative relationship with income inequality when its interaction with corruption is included in the model. This result holds for all types of foreign aid. Negative interactions between foreign aid and corruption show that foreign aid reduces income inequality in countries where control for corruption is high.

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Section: Resultssupporting

confidence: 84%

Section: Literature Reviewmentioning

confidence: 92%

The relationship between foreign aid and income inequality and the role of corruption

Maqbool

Ali²

2021

Journal of Public Affairs

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Cross-Border Support: A Solution to Poverty and Inequity in Pakistan

Ashraf,

Asad Abbas

et al. 2023

BBE

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This study aims to examine the impact of foreign resources on alleviating poverty and inequality within the context of Pakistan. Utilizing secondary data spanning from 1980 to 2022, the study employs the Autoregressive Distributed Lag Model (ARDL) to derive its findings. Two distinct models are employed to assess poverty and inequality. In the initial model, the headcount ratio serves as the dependent variable, with foreign direct investment, foreign remittances, foreign aid, external aid, gross fixed capital formation, and labor force participation rate acting as independent variables. Meanwhile, the second model employs the GINI coefficient as the dependent variable, while maintaining the same set of independent variables as the poverty model. The long-term findings of the first model reveal a negative and statistically significant relationship between remittances, foreign aid, gross fixed capital formation, labor force participation rate, and poverty. Although GDP displays a negative relationship with poverty, it lacks statistical significance, while foreign direct investment shows a positive relationship with poverty. Turning to the results of the second model, Foreign Direct Investment, remittances, foreign aid, GDP, gross fixed capital formation, and labor force participation rate are found to be significant and negatively associated with inequality. Conversely, external debt demonstrates a positive and significant relationship with poverty.

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The Egalitarian Impact of Aid on Some Latin American Countries

Cited by 2 publications

References 31 publications

The relationship between foreign aid and income inequality and the role of corruption

The relationship between foreign aid and income inequality and the role of corruption

Cross-Border Support: A Solution to Poverty and Inequity in Pakistan

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