Kiel Working Papers, Kiel Institute for World Economics
No 1609:
Why it pays for aid recipients to take note of the Millennium Challenge Corporation: Other donors do!
Axel Dreher, Peter Nunnenkamp and Hannes Öhler
Abstract: It is widely believed that the Millennium Challenge
Corporation (MCC) has grossly fallen short of high expectations raised by
the Bush administration in 2002. From the perspective of potential
recipient countries, the crucial issue is whether the MCC increased the
overall pool of aid resources available to them. We argue that this
question extends far beyond the distribution of the limited MCC resources.
By employing OLS and treatment-effects estimations, we assess how other US
aid agencies and non-US donors reacted to MCC decisions. We find that
positive signaling effects tend to dominate possible substitution effects
not only for overall US aid but also for multilateral donors. Regarding
other bilateral donors the evidence is mixed
Keywords: official development aid, Millennium Challege Corporation, additionality, signaling, United States, other DAC donors; (follow links to similar papers)
JEL-Codes: F35; (follow links to similar papers)
22 pages, March 2010
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