ESSAYS ON FOREIGN DEVELOPMENT AIDS AND FOREIGN DIRECT INVESTMENTS IN EMERGING ECONOMIES

Author

Adebukola Adeleke, Southern Illinois University CarbondaleFollow

Date of Award

5-1-2023

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Sylwester, Kevin

Abstract

The first chapter examines donors’ motives for allocating foreign health aid. Do donor countries allocate foreign aid according to their economic interests or the needs of recipient countries?”. This paper analyzes the relevance of the donor country’s government ideology – namely, where it fits on the political spectrum – on how much its aid agencies can be influenced by industrial interest groups. Specifically, I follow Suzuki (2020) and consider to what extent countries with large pharmaceutical sectors structure aid so that recipient countries buy more pharmaceuticals. However, I allow results to differ not only on how autonomous aid agencies are in the donor countries but on whether the ruling government is left or right/center. Using a fractional logit model, the result shows that neither government ideology nor the structure of aid agencies is sufficient on its own in determining health aid allocation (either for economic interest or for the needs of the recipient countries). The allocation of foreign aid is dependent on the combination of government ideology and the structure of the aid agency. Also, regardless of the structure of the aid agency, a government with a right/center political ideology allocates more aid to basic needs than a left party. In the second Chapter, the paper considers to what extent infant mortality lessens for those near a facility financed by development aid. Using geocodes, the study matches household-level data taken from the Bangladesh Demographic and Health Surveys to the location of these aid-backed facilities. Therefore, this paper investigates if proximity to an aid-financed facility enhances the chances of infant survival at the sub-national level. Using a difference-in-difference strategy, the results indicate that geographical proximity to active aid projects reduces infant mortality. In addition, there is evidence of biases in the allocation of aid as the study shows that aid projects are established in areas that on average have lower infant mortality than non-aid locations. The result concludes that while aid is effective in reducing infant mortality in areas where development aid projects are established, there are biases in the allocation as aid is not reaching those that need it the most. The third chapter examines to what extent foreign direct investments worsen environmental pollution. Many see Foreign Direct Investment (FDI) as a source of economic development, income growth, and employment in developing countries. However, FDI could also cause pollution, hurting the environment and harming health. According to past studies, there appears to be no consensus on whether FDI has a positive or negative effect on the host’s environment in developing countries. Using a panel of 48 Sub-Saharan African (SSA) countries, this study examines to what extent inflows of FDI lead to greater pollution using carbon dioxide as a measure of pollution. To the best of my knowledge, this is the first attempt to study this issue for a group of sub-Saharan African countries from 1990 to 2018. The results from fixed effects models show that FDI has no effect on pollution in Sub-Saharan African Countries. These results do not support the Pollution Haven Hypothesis, suggesting that polluting industries leave countries where environmental regulations are strict to re-establish themselves in countries with lax environmental oversight. Given that many African countries are deemed to have ineffective governance (and so presumably less able to enforce environmental standards), the lack of a positive association is especially striking. However, the results show a significant positive relationship between FDI and pollution in more democratic countries while FDI pollutes less in countries that are less democratic.