Ancestral Characteristics of Modern Populations and the Effect of Aid on Institutions
Abstract
This paper analyzes the impact of foreign aid on institutional quality. While there is no clear definition for institutional quality, we define it to be an average measure of a countrys level of democracy, accountability of its government to the populace and ability provide public goods, as well as the governments capacity to enforce the rule of law. The body of prior empirical literature fails to reach a consensus on the impact of aid on institutional quality. The heterogeneous nature of aid is widely recognized, but little understood. We suggest that there are underlying factors correlated with both the probability of receiving aid and aids effectiveness in promoting institutional quality that may be driving these varied results. Therefore, in order to mitigate and potentially quantify omitted variable bias concerns, we proxy for gender inequality through ancestral characteristics, specifically, the creation of the plow and practice of brideprice. Contemporaneous measures of gender inequality are riddled with problems of reverse causality and endogeneity concerns. The use of historic and unchanging ancestral traits allows us to employ fixed effects to alleviate these issues of reverse causality. Ancestral characteristics shape contemporary institutions, but accidents of past fortune do not necessarily consign countries to permanent poverty. External assistance, foreign aid, reverses the misfortunes of the past. While contemporary societal characteristics have changed through time, many regions are stuck with inherited institutions from their progenitors. By shaping institutions, foreign aid benefits countries whose institutions are rooted in the past. Once underlying factors that can influence the impact of aid on institutional quality are understood, we can then begin to comprehend the true relationship between foreign aid and institutional quality.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 20, 2019
- Accession Number
- AD1073947
Entities
People
- Cassandra R. Dooley
Organizations
- United States Naval Academy