The first essay revisits the highly debated aid-policy-growth association with updated data. The results overturn Burnside and Dollar’s original findings by simply using new data over the same countries and years. Additional tests indicate that the original results are mainly sample driven. Marginal effects from the extended sample (1962-2013) provide some evidence that aid can promote growth in the presence of good policies. Post-Cold War (1990-2013) analysis, however, reveals that aid may decrease growth at any level of policy. The overwhelming majority of the results suggest aid conditional on policy is ineffective. This essay illustrates why the debate continues by showing that the results are highly sensitive to country-year selection, choice of methodology, instrumental variable selection, measurement of institutional quality, and growth rate measurement. Depending on a number of factors, both sides of the debate can be right. The second essay investigates the question “does foreign aid promote entrepreneurship?” This question has not been investigated in the existing literature. With a panel of 38 countries during 2005 to 2014, this research connects aid and recipient countries’ entrepreneurial activities. Aggregate aid tends to only boost necessity driven early-stage entrepreneurship and benefit low-income entrepreneurs. Aid to infrastructure promotes entrepreneurship driven by both opportunity and necessity motivations. It also incentivizes more entrepreneurs to compete with homogeneous products. Evidence also suggests that both aggregate aid and infrastructural aid discourages adoption of state of the art technologies, raises business failure rate, and is associated more with necessity-driven early-stage entrepreneurial activities for females. The third research examines the cross-country effectiveness of Aid for Trade (AfT) policy during 2004 to 2013. AfT targets trade liberalization through reducing trade costs and facilitating exports in recipient countries. This development policy has attracted much attention despite the doubts of effectiveness of foreign aid in general. Overall, this paper does not find evidence supporting AfT reducing trade costs or enlarging exports or imports. However, aid to economic infrastructure is positively related to service exports; it also connects aid recipient countries more closely with high-income donor countries via importing more merchandise from each other. At the same time, recipient countries import less from other low and middle income neighboring countries. In terms of sectoral AfT, aid to industry sector decreases manufactured imports, either due to substitution toward domestic manufactured products or because of higher tariffs of manufactured products.
| Identifer | oai:union.ndltd.org:MSSTATE/oai:scholarsjunction.msstate.edu:td-5723 |
| Date | 10 August 2018 |
| Creators | Jia, Shaomeng |
| Publisher | Scholars Junction |
| Source Sets | Mississippi State University |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Theses and Dissertations |
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