Journal Article

Does Aid for Education Educate Children? Evidence from Panel Data

Axel Dreher, Peter Nunnenkamp and Rainer Thiele

in The World Bank Economic Review

Volume 22, issue 2, pages 291-314
Published in print June 2008 | ISSN: 0258-6770
Published online April 2008 | e-ISSN: 1564-698X | DOI: http://dx.doi.org/10.1093/wber/lhn003
Does Aid for Education Educate Children? Evidence from Panel Data

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Most of the aid effectiveness literature has focused on the potential growth effects of aggregate aid, with inconclusive results. Considering that donors have repeatedly stressed the multidimensionality of their objectives, a more disaggregated view on aid effectiveness is warranted. The impact of aid on education is analyzed empirically for almost 100 countries over 1970–2004. The effectiveness of sector-specific aid is assessed within the framework of social production functions. The Millennium Development Goals related to education, particularly the goal of achieving universal primary school enrollment, are considered as outcome variables. The analysis suggests that higher per capita aid for education significantly increases primary school enrollment, while increased domestic government spending on education does not. This result is robust to the method of estimation, the use of instruments to control for the endogeneity of aid, and the set of control variables included in the estimations.

Keywords: F35; O11; H52; I22

Journal Article.  9275 words.  Illustrated.

Subjects: International Finance ; Economic Development ; National Government Expenditures and Related Policies ; Education and Research Institutions

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