Effective Aid: How Democracy Allows Development Aid to Improve the Quality of Life
Posted: 7 May 2005
Research into foreign aid has mostly focused on its ability to affect economic (i.e., GDP per capita) growth. Conclusions have been mixed. I consider aid's effectiveness differently: by its ability to improve quality of life. I find that, though aid does not affect quality of life in the aggregate, it is effective when combined with democracy, and ineffective (and possibly harmful) in autocracies. The results suggest that aid would be more effective if it were combined with efforts to encourage democratization.
Keywords: Foreign aid, democratization, sustainable development, Human Development Index
JEL Classification: F35, O10, H50
Suggested Citation: Suggested Citation