Does Foreign Aid Decrease Inequality? Evidence from the Most Recent Data
|Author:||Bc. Anna Umlaufová|
|Year:||2019 - summer|
|Leaders:|| PhDr. Jaromír Baxa Ph.D.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||Income inequality is an alarming issue affecting especially developing countries,
yet very scarce attention is paid to how it is influenced by development aid. This
study investigates the relationship, focusing on modern approaches to foreign
assistance which have changed considerably since 1999. With a sample of
123 developing countries, the effect is estimated using both static and dynamic
panel data techniques while controlling for the Kuznets curve. The results show
that robust to method and functional form, development aid neither improves
nor worsens inequality. Nonetheless, estimating the model for specific groups
of countries in the sample yields different, statistically significant results, while
also depending on political environment.