Premium
DOES NATION BUILDING SPUR ECONOMIC GROWTH?
Author(s) -
Creasey Ellyn,
Rahman Ahmed S.,
Smith Katherine A.
Publication year - 2015
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12148
Subject(s) - economics , construct (python library) , development economics , public economics , computer science , programming language
Nation building, the allocation of economic aid conditional on military assistance in conflict and post‐conflict environments, has cost the world trillions of dollars over the last half century. Yet few attempts have been made to quantify the potential economic growth effects for the recipient country from the provision of this aid. Using a 45‐year panel dataset, we construct a measure of nation building using a three‐way interaction term between military assistance, economic aid, and conflict regime. Considering that slow growing and problem‐prone countries may be less likely to receive aid, we instrument for economic aid by estimating donor‐to‐donee aid flows in a first‐stage procedure. Using this approach, we find that spending on nation building has positive growth effects during conflict periods, but that these effects disappear after conflict . ( JEL F3, F4, O5)