Rent Seeking and Aid Effectiveness
Journal
International Tax and Public Finance
ISSN
0927-5940
ISSN-Digital
1573-6970
Type
journal article
Date Issued
2007-10
Author(s)
Abstract
We introduce foreign aid and a rent seeking contest for public funds into the Barro (JPE 1990) growth model. We find that aid effectiveness depends on fiscal policies, the level of aid inflows and the quality of institutions that restrict appropriation of public funds by rent seeking agents. These results can be shown to be consistent with the best established findings in the empirical literature on aid effectiveness. Rent seeking may thus indeed be a major determinant of aid effectiveness. We further discuss how aid effectiveness depends on the way foreign aid is disbursed and on the determinants of institutional quality.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Springer
Publisher place
New York
Volume
14
Number
5
Start page
525
End page
541
Pages
17
Subject(s)
Eprints ID
234954