title: Does development aid increase military expenditure?
creator: Langlotz, Sarah
creator: Potrafke, Niklas
subject: ddc-330
subject: 330 Economics
description: The diversion of development aid to the recipient’s military may be one explanation why aid is often found to be ineffective in promoting economic growth and development. Previous studies have not derived the causal effects of development aid on military expenditure. Using a new instrumental variable strategy, we examine whether bilateral development aid increases military expenditure in recipient countries. The instrument is the interaction of donor government fractionalization and the probability of receiving aid. The dataset includes new data on military expenditure for 124 recipient countries over the 1975-2012 period. While development aid has a positive effect on military expenditure in the full sample, the effect vanishes when we exclude outliers. However, we find that aid provided by coordinated market economies increases military expenditure in the full sample of recipient countries, even after controlling for outliers. Coordinated market economies have been found to deliver more government-to-government aid, which has a higher risk of capture compared to aid delivered through non-state development actors.
date: 2016-09
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/21876/1/Langlotz%20Potrafke%202016%20dp618.pdf
identifier: DOI:10.11588/heidok.00021876
identifier: urn:nbn:de:bsz:16-heidok-218765
identifier:   Langlotz, Sarah ; Potrafke, Niklas  (2016) Does development aid increase military expenditure?  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/21876/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng