Leadership

Foreign Aid And Enlightened Leaders

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Executive Summary

To study whether foreign aid fuels personal, regional and ethnic favoritism, the authors use satellite data on nighttime light for any region in any aid-recipient country, and they determine for each year and each country the region in which the current political leader was born. Having a panel with 22,850 regions in 91 aid recipient countries with yearly observations from 1992 to 2005, they compare the effect of foreign aid on nighttime light across regions. They find that in countries with poor political institutions, this effect is significantly higher in the region in which the current political leader was born than in other regions.

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