Coviello, DecioIslam, Roumeen2012-06-182012-06-182006-08https://hdl.handle.net/10986/8364Aid is expected to promote better living standards by raising investment and growth. But aid may also affect institutions directly. In theory, these effects may or may not work in the same direction as those on investment. The authors examine the effect of aid on economic institutions and find that aid has neither a positive nor a negative impact on existing measures of economic institutions. They find the results using pooled data for non-overlapping five-year periods, confirmed by pooled annual regressions for a large panel of countries and by pure cross-section regressions. The authors explicitly allow for time invariant effects that are country specific and find the results to be robust to model specifications, estimation methods, and different data sets.CC BY 3.0 IGOADVERSE EFFECTSAIDAID FLOWSBANK DEPOSITSBANKRUPTCYBUREAUCRACYBUREAUCRATIC QUALITYCENTRAL AMERICACIMCOMPETITIVENESSCONTRACT INTENSIVE MONEYDEREGULATIONDEVELOPMENT ASSISTANCEDEVELOPMENT ISSUESECONOMETRICSECONOMIC GROWTHECONOMIC OUTCOMESEQUATIONSEXCHANGE OF IDEASEXCHANGE RATEEXCHANGE RATE APPRECIATIONEXPROPRIATION RISKFINANCIAL SECTORFISCAL POLICYFOREIGN AID INFLOWSGDPGNPGNP PER CAPITAGOVERNMENT EXPENDITURESGOVERNMENT REGULATIONGOVERNMENT REGULATIONSGOVERNMENT STABILITYGROWTH RATEHUMAN CAPITALICRGINFRASTRUCTURE SERVICESINSTITUTIONAL CHANGEINSTITUTIONAL DEVELOPMENTINSTITUTIONAL QUALITYINSTITUTIONAL REFORMINTEREST RATEINTERVENTIONLIVING STANDARDSM2MORAL HAZARDOVERSEAS DEVELOPMENT ASSISTANCEPOLICY ADVICEPOLICY RESEARCHPOLITICAL INSTITUTIONSPOLITICAL STABILITYPOLITICAL SYSTEMSPOSITIVE EFFECTSPRIVATIZATION PROCESSPROPERTY RIGHTSPUBLICPUBLIC BANKSPUBLIC EXPENDITURESPUBLIC INVESTMENTPUBLIC SPENDINGREAL GDPREGULATORY FRAMEWORKRENT SEEKINGSUB-SAHARAN AFRICATAXATIONTECHNICAL ASSISTANCETOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHVOTERSWorld Bank10.1596/1813-9450-3990