The Aid Effectiveness Literature: The Sad Results of 40 Years of Research

The aid effectiveness literature (AEL) consists of empirical macro studies of the effects of development aid. By the end of 2004, it had reached 97 econometric studies of three families, which have been analyzed in one study for each family using meta-analysis. The AEL is an ideal subject for meta-analysis as it uses only a few formally similar models which try to catch precisely the same effects. Also, it is an area with strong beliefs – often generated by altruism – and interests. In this survey of the AEL, we shows that when the whole of the literature is examined, a clear pattern emerges in the results: after 40 years of development aid, the evidence indicates that aid has not been effective. We show that the distribution of results is significantly asymmetrical in a way that reflects the reluctance of the research community to publish negative results. The Dutch Disease effect of aid has been ignored but is a plausible explanation for aid ineffectiveness

Privatization in Denmark, 1980-2002

Denmark is one of the most developed welfare states, but also a rather capitalistic state with little public ownership outside the traditional fields of the public sector and the natural monopolies of the network industries. The low level of public ownership corresponds to peoples’ attitude in polls. Nevertheless, 12 privatizations of state companies have been made along with everybody else. No statistics on privatization have been previously published in Denmark. Most of the 12 privatizations are small, and the telephone company provides 76 percent of the total revenue. In the municipal sector, however, most privatization activity appears to be outsourcing.Privatization, outsourcing, capitalist values

Two Views on Institutional Development: The Grand Transition vs the Primacy of Institutions

The Grand Transition (GT) view claims that economic development is causal to institutional development, and that many institutional changes can be understood as transitions occurring at roughly the same level (zones) of development. The Primacy of Institutions (PoI) view claims that economic development is a consequence of an exogenous selection of institutions. Our survey of the empirical evidence and our own estimates reveal that it is easy to find convincing evidence supporting either of the two views. Property rights do affect development as suggested by the PoI. However, democracy is mainly an effect of development as suggested by the GT. We conclude that the empirical results are far too mixed to allow for a robust assessment that one of the two views is true and the other false. This finding implies that focusing on institutional development is unlikely to be successful as the key strategy for the economic development of poor countries.Grand transition, primacy of institutions, democracy, corruption, development

Missing social capital and the transition in Eastern Europe

The transition of the »Old Communist« countries of East and Central Europe has been disappointingly slow given the amount of physical and human capital available at the start of the transition. We argue that this slowness is caused by the lack of social capital, which is an important factor of production. The Communist system replaced it with an official organization of society. Further, the communist system needed a set of grey/black networks of »fixers« to give it the necessary flexibility. These networks were tolerated, but controlled. When the Communist regime ceased the official organizations collapsed and so did most of the control systems. This allowed a flourishing of the grey/black networks, which can be harmful to the operations of a market economy. The available data are still scanty, but they confirm the argument.Social capital; network; communism; Eastern Europe; Trust; Corruption; Political participation

Why is the World Short of Democracy? A Cross-Country Ananlysis of Barriers to Representative Government

This study first uses a set of graphs and tables to present the pattern of democracy in the world, using the Gastil Index. Then a statistical analysis is conducted by two techniques: Regression techniques are used to analyze the effect on democracy of a handful of variables. It shows that poverty, Communism and the Muslim culture are the main barriers to democracy. It then uses Bayesian probability methods to make explicit the concept of the “risk” of countries being ndemocratic. The analysis focuses on the dynamics of the income effect and of the democratic deficit of the Muslim countries to see if it is stationary or transitory. It is unstable, so it may be transitory, but it has been rising.Democracy, Lipset’s law, Western vs Muslim Culture

Growth, Income and Regulation: a Non-Linear Approach

This paper analyzes the effect on GDP growth of income (GDP per capita) and economic regulation. A simple theoretical framework presents two opposing views. We analyze the empirical relation using a non-linear dynamic panel data model with fixed effects. The result shows that the effect of regulation on growth depends on income. For low-income countries, there is little effect of changing regulation. For highly regulated middle-income countries, deregulation can increase growth. For high-income countries, deregulation leads to higher growth. Holding regulation constant, there is catch-up growth with a maximum at an intermediate income level.catch-up growth; economic freedom; fixed effects; GMM; specification tests

Hjælper udviklingshjælpen?

Halvdelen af alle projekter lykkes; men analysen af 103 undersøgelser finder, at virkningen på modtagerlandenes BNP gennem 40 år har været så lille, at den ikke er statistisk signifikant.&nbsp

Salarios Mínimos y Medios: Análisis de la Causalidad: Los Casos de Argentina, Brasil y Chile

Minimum wage (MW) policies are an old and controversial tradition in Latin America. Controversy develops principally on the different effects that in standard economic analysis are associated to MW policies such as creation of larger unemployment, higher