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School Research Seminar

More Foreign Aid for Better Political Relation?

There is a rich literature on whether foreign aid can improve economic growth in the recipient country, yet few study the motivation of aid donors. Can the allocation of foreign aid be a strategic tool to improve bilateral political relation as many newspaper articles have argued? This paper seeks to answer this question accounting for the dynamic interaction between foreign aid and political relation in the panel vector auto regression. Using bilateral data from 1972 to 2013, we find evidence that bilateral foreign aid weakens bilateral political relation and that donors allocate more foreign aid to countries with better political relation. The negative impact of foreign aid on political relation is weaker when the donor and recipient countries are from the same legal system or were in colonial relationship before.
Seminar Room 2-2,
Level 2, Manasseh Meyer,
Lee Kuan Yew School of Public Policy,
National University of Singapore
Thu 5 April 2018
12:15 PM - 01:30 PM

Zheng Huanhuan

Zheng Huanhuan

Assistant Professor, LKYSPP

More about speaker

Chen Kang

Chen Kang

Director (MPAM and CEE) and Visiting Professor, LKYSPP

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