Do political instiutions affact the impact of Official Development Assistance success on poverty reduction?

• Main Authors: Couton, Ugo, Yuan, Tian
• Format: Others
• Language: English
• Published: Jönköping University, IHH, Nationalekonomi 2020
• Subjects: Economics and Business; Ekonomi och näringsliv
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-51349

The United Nations, in their 2030 Agenda for sustainable development, states that “eradicatingpoverty in all its forms and dimensions, including extreme poverty, is the greatest globalchallenge and an indispensable requirement for sustainable development”. Hence, as it is aglobal challenge, we have decided to investigate how can the efforts to address this issue withofficial development assistance could be facilitated or mitigated by democracy and stronginstitutions. Hopefully will our observations provide a clearer idea of how the politicalbackground can be arranged to facilitate the efforts of poverty alleviation. The study that we have conducted relies on various theories and models. Among them are the papers from Burnside & Dollar who have extensively studied the relationships that exists between foreignaid, economic policies, and GDP per capita growth which are defining concepts for our paper. This paper then regresses poverty on six variables: democracy and institutional stability, officialdevelopment aid, gross capital formation, school enrolment, and unemployment rate. This panelseries analysis covering the period 2008-2018 aims to show if ODA effectively affect poverty,and how the level of democracy and institution stability plays a role in that relationship. Theregressions conducted advocated that institutional stability plays an important role in reducingabsolute poverty. In the meantime, relative poverty was very slightly increased by both democracy and stability, but both indicators seem to have a positive impact on ODA’s capacityto reduce relative poverty.