Aid and Economic Freedom: An Empirical Investigation Using the Heritage Index

Journal of Development Perspectives, Vol. 3, No. 1, pp. 116-135, 2007

Posted: 12 Jan 2011

See all articles by Tobias Knedlik

Tobias Knedlik

Fulda University of Applied Sciences; Halle Institute for Economic Research (IWH)

Franz Kronthaler

Halle Institute for Economic Research

Date Written: January 11, 2007

Abstract

The paper explores the relationships between economic freedom on the one side and development aid and IMF credit as approximation for conditional aid on the other side. After a short review of current literature, the paper develops a simple panel regression model to evaluate the relationships. In contrast to previous research, our results allow the rejection of the hypothesis that IMF credit increases economic freedom and that development aid is not contributing to economic freedom. It could not be shown that countries can be pushed towards economic freedom by aid conditions. The paper discusses explanations of the empirical findings.

Keywords: Aid receiving countries, economic freedom, development aid, IMF credit

JEL Classification: F35, O19, P1

Suggested Citation

Knedlik, Tobias and Kronthaler, Franz, Aid and Economic Freedom: An Empirical Investigation Using the Heritage Index (January 11, 2007). Journal of Development Perspectives, Vol. 3, No. 1, pp. 116-135, 2007, Available at SSRN: https://ssrn.com/abstract=1738244

Tobias Knedlik (Contact Author)

Fulda University of Applied Sciences ( email )

Leipziger Stra├če 123
Fulda, 36037
Germany

Halle Institute for Economic Research (IWH) ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Franz Kronthaler

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

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