aid for the poorest some early lessons of uk experience the paper presents an interim review of recent attempts to reach the poorest people in developing countries through aid policy from the viewpoint of one donor the united kingdom it concludes that the uk has achieved a modest increase in the proportion of aid aimed at the poorest between 1974 and 1979 that poverty focused projects are in general more local cost intensive and have lower rates of return than others and that the principal difficulties in the way of successful implementation of poverty focused projects are excessive size an over rapid rate of disbursement inadequate local cost provisions and failure to specify the target group or the repayment strategy with sufficient precision it is argued that there are political obstacles to removing the second and third of these obstacles in donor countries and to removing the fourth in recipient countries also

can foreign aid reduce income inequality and poverty this paper s goal is to examine the effect of foreign aid on income inequality and poverty reduction for the period 1971 2002 since simple cross country regressions cannot be taken as true time series findings we focus on dynamic panel data techniques which allow accounting for potential simultaneity and heterogeneity problems we find some weak evidence that foreign aid is conducive to the improvement of the distribution of income when the quality of institutions is taken into account however this result is not robust this finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions

consideration review of research and prospects for future insights the authors review the behavioral underpinnings of consideration set formation and revisit the theoretical and empirical evidence that led them to develop an individual level model of consideration

non nested models of australia s overseas aid program after briefly surveying the existing on overseas aid motivations some empirical results are presented for australian bilateral aid in terms of the two competing theories in the aid literature namely the recipient need model and the donor interest model the empirical results for austrlia are atypical in that there is support for both hypotheses this is contrast to the results of previous studies of large nation states the united states britain germany france and japan which have found support for the donor interst model but not the recipient need model given that the empirical results reported here are consistent with both models this paper then proceeds to apply the relatively new tests of non nested hypotheses to the models the results indicate that australia s aid program has both recipient need and donor interest concerns i some years the recipient need motive dominates and in other years donor interest dominates

foreign aid an instrument for fighting communism abstract in this paper we test the argument that the sizeable reduction in aggregate aid levels in the 1990s was due to the end of the cold war we test two different models using a dynamic econometric specification on a panel of 17 donor countries spanning the years 1970 97 we find aid to be positively related to military expenditures in the former eastern bloc during the cold war but not in the 1990s suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid we also study the effect on aid allocation but here we do not find any robust effects of the end of the cold war

competitive strategies for late entry into a market with a dominant brand this paper considers optimal positioning advertising and pricing strategies for a firm contemplating entry in a market dominated by an entrenched competitor drawing on behavioral research on consumer preference formation we develop an individual level model that reflects differing consumer responses to similar products offered by the dominant brand and later entrants an effect we term asymmetric preferences from the resulting aggregate market response model we derive several competitive implications notably 1 that preference asymmetry can make a differentiated late entry strategy optimal even if preferences would appear to dictate otherwise and 2 that me too strategies are not equilibrium late entry strategies more generally our analysis suggests that preference asymmetry can contribute to the persistent competitive advantage of dominant brands

the recurrent cost problem in the least developed countries the manifestation of the recurrent cost problem at the micro and macro levels is continuing if not worsening least development the article examines the causes of the recurrent cost problem and shows that there is no one simple cause and that responsibility lies in varying degrees between the least developed country governments and their aid partners given the diversity of the possible causes of the recurrent cost problem a broad package of measures including domestic policy changes and international support measures are proposed

beneficial or detrimental ignorance the straw man fallacy of flyvbjerg s test of hirschman s hiding hand summary in a recent paper in this journal the fallacy of beneficial ignorance a test of hirschman s hiding hand professor bent flyvbjerg claims that there is no such thing as beneficial ignorance and that ignorance is detrimental to project success moreover he argues that if hirschman s principle of the hiding hand were correct then benefit overruns would exceed cost overruns thus with a statistical test he demonstrates that the hiding hand is in fact less common than its evil twin the planning fallacy in this rejoinder the author shows that flyvbjerg s test is built on a straw man fallacy and that he fails to refute the hiding hand contrary to flyvbjerg who focuses on the narrow costs and benefits this paper provides evidence that while the hiding hand is found among projects that are project management failures but project successes the planning fallacy fits with projects that are both project management and project failures on that basis the author analyzes a sample of 161 world bank funded projects of different types and finds that the hiding hand prevails while future research should ascertain this finding the author then points out the methodological limitations of flyvbjerg s test indeed it is ironic that the hiding hand a principle crafted against the very idea of cost benefit analysis is refuted on that very basis even worse flyvbjerg in his cost benefit analysis ignores the full life cycle project costs and benefits the unintended project effects the difficulties and problem solving abilities so dear to hirschman and thus treats the management of projects as a kind of black box finally the author submits that hirschman was a behavioral project theorist and argues that it is more important to shed light on the circumstances where the hiding hand works than to question whether the principle of the hiding hand is right

a two stage disaggregate attribute choice model a two stage disaggregate attribute choice model is proposed and empirically implemented the first stage of the model is attribute processing to screen the number of alternatives down to a lesser number the second stage is brand alternative processing which considers the attributes simultaneously while allowing for tradeoffs among the attributes this two stage approach is then applied to the same real world data set as two single stage disaggregate models logit and maximum likelihood hierarchical mlh which are state of the art models representing the alternative and attribute processing approaches respectively the predictive accuracy of the two stage approach compares favorably to the single stage models in addition it seems to offer diagnostic information that can provide managerial insights not found in the output of the single stage model

the effect of foreign aid on corruption a quantile regression approach abstract this paper investigates the effect of foreign aid on corruption using a quantile regression method we show that foreign aid generally reduces corruption and its reduction effect is greater in less corrupt countries moreover this effect is different by different donor countries

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

a fuzzy set model of search and consideration with an application to an online market several two stage choice models consideration stage plus choice stage have been proposed in the marketing literature we extend this literature by developing a more general model that incorporates how consumer search influences the degree to which they consider various brands to test the validity and value of our model we operationalized it with data obtained from peapod an online grocer where we tracked consumers search processes we demonstrate that our model performs better than competing models on all the key criteria new choice models such as the ones proposed here are necessary for deriving managerially relevant understanding of choice behavior in online markets our empirical results suggest that consumers search both their internal memory and external information at the store to determine the degree to which they consider various brands consumers are also heterogeneous with respect to their capability to process external information for some consumers external information search dramatically increases the degree to which they consider various brands but for others it has little impact on their consideration we also find that certain features e g personal lists reduce consideration set sizes whereas other features e g sort increase consideration set sizes

incarceration and incapacitation evidence from the 2006 italian collective pardon abstract in august 2006 the italian government released one third of the nation s prison inmates via a national collective pardon we test for a discontinuous break in national crime rates corresponding to the mass release we also test for the effect of the return of the incarceration rate to its predicted steady state level on national crime rates finally we exploit regional variation in prison releases based on the province of residence of pardoned inmates all three sources of variation yield substantial incapacitation effect estimates and suggest that the crime preventing effects of incarceration diminish with increases in the incarceration rate jel k42

electoral competition and politician turnover abstract in this paper we analyze the selection by opportunistic parties of the candidates who run for election we consider a setting with incomplete but symmetric information about the candidates abilities in which electoral campaigns provide voters with additional information about candidates parties care only about selecting an appropriate candidate to win the election while voters elect the best candidate conditional on their information we first argue that in order to defeat an established very good candidate of its rival a party may favor a new candidate with highly uncertain ability rather than an established good candidate next we establish that the discrepancy between the objective of parties and the objective of the electorate leads to inefficient conservatism in the selection of candidates i e each party keeps its incumbents too often from the voters viewpoint

estimating aid allocation criteria with panel data in 1990 the net amount of economic aid or official development assistance to all recipients from all multilateral and bilateral sources was about 62 billion an amount that exceeded the gdps of greece and portugal despite the size of this yearly transfer there has been no rigors modeling and estimation of the criteria by which it occurs as a result there is little agreement about the extent to which oda is allocated according to the needs of the recipient countries the purpose of this paper is to develop a rigorous theoretical model of oda allocation that can be used to provide consistent estimates of the importance of recipient needs copyright 1994 by royal economic society

foreign aid and human development the impact of foreign aid to the health sector author affiliation claudia r williamson department of economics west virginia university p o box 6025 morgantown wv 26506 6025 usa e mail claudia williamson mail wvu edu acknowledgment i would like to thank the editor and two anonymous referees for their time valuable comments and helpful suggestions i would also like to thank peter t leeson and russell s sobel for their valuable comments and suggestions also i would like to thank matt e ryan for his helpful comments in addition i appreciate the comments received from tomi ovaska and the 2006 southern economic association conference participants 1 introductioninternational aid is one of the most powerful weapons in the war against poverty today that weapon is underused and badly targeted there is too little aid and too much of what is provided is weakly linked to human development united nations development programme 2005 p 75 according to the 2005 human development report united nations development programme 2005 there is a general consensus that foreign aid s first objective should be human development in 2000 governments from various countries met at the united nations and signed the millennium declaration a pledge to free our fellow men women and children from the abject and dehumanizing conditions of extreme poverty one way of achieving these goals is through development assistance united nations development programme 2005 this advice has been widely accepted in the donor community during the past five years because total aid to the health sector has more than doubled for example as illustrated in figure 1 from 1999 to 2004 aid to the health sector rose from 1930 to 4435 millions of 2004 dollars oecd 2007 figure 1 foreign aid to the health sector 1973 2004 figure omitted see article image with growing intensity given to international human development aid an analysis of its effectiveness is worthwhile both conceptual and empirical literature debates the effectiveness of foreign aid for economic development without a general consensus on the role of foreign assistance in economic development two contrasting hypotheses have emerged one is a public interest argument where some authors state that aid can and should be used to assist in the development process sen 1999 sachs 2005 the other is a public choice hypothesis that presents arguments indicating that foreign assistance is ineffective and has the potential to damage future growth opportunities bauer 2000 easterly 2001 these two competing hypotheses lead to different predictions on the use of foreign aid for human development for a clear answer one must turn to empirical analysis current empirical literature primarily supports the public choice perspective indicating that foreign aid is ineffective in promoting economic development filmer and pritchett 1999 svensson 1999 filmer hammer and pritchett 2000 2002 knack 2001 brumm 2003 brautigam and knack 2004 economides kalyvitis and philippopoulos 2004 djankov montalvo and reynal querol 2005 hartford and klein 2005 and heckelman and knack 2005 in these studies the authors focus on the impact of foreign aid on economic development and find no significant impact however in a recent study by gomanee girma and morrissey 2005 the authors show that aid can improve human welfare through increases in certain public expenditures supporting the public interest predictions their methodological approach neglects to control for endogeneity and this could lead to biased results thus further analysis is required with the recent shift in the promotion of aid from economic to human development it is timely to investigate the role of foreign aid for human development purposes this paper provides the next step in the literature by establishing the link between foreign aid and human welfare

deconstructing the pioneer s advantage examining vintage effects and consumer valuations of quality and variety several studies have demonstrated an order of entry effect on market share suggesting that pioneers outperform later entrants however other research has pointed out the limitations of these studies and found evidence that many pioneers fail or have low market share given this background the purpose of this research is to understand the conditions under which pioneers are more likely and also less likely to have an advantage we propose a game theoretic model that includes important sources of pioneer advantages as well as disadvantages specifically we incorporate a pioneer advantage due to preemption in markets with heterogeneous tastes in addition we incorporate a potential pioneer disadvantage due to technology vintage effects where later entrants utilizing improved technology can have lower costs and higher quality the model allows us to evaluate the extent of vintage effects necessary to overcome a pioneer s advantage key relationships are found between the magnitude of the pioneer advantage or disadvantage and consumer valuations of product attributes e g variety and quality we empirically validate the model with vintage effect data in 36 product categories and measures of consumer valuations of product variety and quality for 12 of these 36 categories the results show that pioneers do better in product categories wherevariety is more important and worse in categories where productquality is more important pioneers in categories with high vintage effects are shown to have lower market shares and higher failure rates similar results appear when analyzing persistence of market leadership over time further validating our model s major implications we also present two case studies that illustrate key elements of the model

order of market entry established empirical generalizations emerging empirical generalizations and future research three established and four emerging empirical generalizations are identified below the first established generalization is that there is a negative relationship between order of market entry and market share second for consumer packaged goods and prescription anti ulcer drugs the entrant s market share divided by the first entrant s share roughly equals one divided by the square root of order of market entry third in mature markets market pioneer share advantages slowly decline over time while the emerging generalizations require additional research support the initial findings suggest 1 for consumer packaged goods order of market entry has a stronger negative relationship with trial penetration than with repeat purchase 2 market pioneers have broader product lines than late entrants 3 skill and resource profiles differ across market pioneers early followers and late entrants and 4 order of market entry is not related to long term survival rates future research topics are also dis

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

constructive consumer choice processes consumer decision making has been a focal interest in consumer research and consideration of current marketplace trends e g technological change an information explosion indicates that this topic will continue to be critically important we argue that consumer choice is inherently constructive due to limited processing capacity consumers often do not have well defined existing preferences but construct them using a variety of strategies contingent on task demands after describing constructive choice consumer decision tasks and decision strategies we provide an integrative framework for understanding constructive choice review evidence for constructive consumer choice in light of that framework and identify knowledge gaps that suggest opportunities for additional research

external assistance and the peace process in el salvador abstract external assistance has played a critical role in the salvadoran peace process yet the priorities of the donors have often diverged from those of the peace accords moreover several major external assistance actors notably the international financial institutions have failed to exercise peace conditionality they have not used formal performance criteria or informal policy dialogue to encourage the timely implementation of high priority peace programs and the mobilization of greater domestic resources for this purpose these institutions have recently broadened their mandates to encompass military expenditure reduction and good governance while these concerns are particularly germane in countries emerging from civil war the case of el salvador demonstrates that they have yet to be fully incorporated into actual practice

aid supplies over time addressing heterogeneity trends and dynamics summary what determines how much foreign aid donors provide existing answers to this question point to a complex range of influences however the tasks of distinguishing between long and short run factors as well as differences between donors have not been adequately addressed taking advantage of data spanning nearly 50 years this paper uses panel cointegration techniques to consider these issues the analysis provides clear evidence for heterogeneity both between donors and over time bandwagon effects and a growing influence of security considerations in aid provision domestic macroeconomic shocks have a moderate but delayed effect on aid disbursements

how much crime reduction does the marginal prisoner buy abstractwe estimate the effect of changes in incarceration rates on changes in crime rates using state level panel data we develop an instrument for future changes in incarceration rates based on the theoretically predicted dynamic adjustment path of the aggregate incarceration rate in response to a shock to prison entrance or exit transition probabilities given that incarceration rates adjust to permanent changes in behavior with a dynamic lag one can identify variation in incarceration rates that is not contaminated by contemporary changes in criminal behavior for the period 1978 2004 we find crime prison elasticities that are considerably larger than those implied by ordinary least squares estimates we also present results for two subperiods 1978 90 and 1991 2004 our instrumental variables estimates for the earlier period suggest relatively large crime prison effects for the later time period however the effects of changes in incarceration rates on crime rates are much smaller

some determinants of foreign aid to india 1960 1985 abstract using a unique data set of aid to india from all sources 1960 1985 we discuss the magnitude and composition of aid and present a principal components analysis of aid giving we then attempt to get at the underlying patterns and causes of aid giving using factor analytic techniques and explain the level of foreign aid by employing a partial adjustment model we find that latent motivations to classify the donor countries into four convenient groups each with different political and economic motivations we also find that the latent variables capturing the motivations of the united states western european countries eastern european countries as well as last year s aid and the balance of trade but not gdp growth are significant determinants of the level of aid

foreign aid poverty reduction and democracy eradication of poverty is the most pervasive goal of donors foreign aid programmes as a result there has been much research on the degree of correlation between aid and poverty reduction however this work to date has shed little light on the direction of causation between the two variables using the method of granger causality and conditioning aid and poverty on the state of democracy in developing countries this study asks whether aid flows impact poverty whether poverty influences aid flows or whether causality proceeds in both directions simultaneously while the results identify no causal relationships in some of the sub samples they point to the existence of a multitude of relationships across others

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

can poor countries lobby for more us bilateral aid summary this article explores if countries can lobby the us government for the allocation of us bilateral foreign aid we consider an informational lobby model where lobbying has two effects first a direct effect by informing us policymakers about their countries needs second an indirect effect on policymakers by informing them about common interests in economic or geopolitical terms the lobbyist thus influences the decisions about the allocation of aid resources we estimate the effect of the recipient country s lobbying agents in obtaining foreign aid the econometric results show that lobbying positively affects the amount of bilateral aid received

aid the public sector and the market in less developed countries a reply the article in this journal by mosley et al i987 concludes its analysis of aid effectiveness as demonstrating inability of development aid over more than twenty years to provide a net increment to overall growth in the third world p 636 this note purports to show that this conclusion which is ostensibly distressing as the authors claim is not warranted the section of the study which is the basis of the conclusion cited and the subject of this note is a cross section regression analysis full details of which are shown in mosley et al table 3 the note is concerned with the relation between the dependent variable specified as the growth rate of real gdp per cent per annum hereafter gdp and aid specified as a percentage of gdp hereafter aid the aid results with only two significant positive coefficients in one subsample certainly give no basis for claiming aid effectiveness in terms of gdp growth the intention in this note is to interpret the results which are assumed to be valid this is made possible by the fact that the authors have helpfully provided the full input set of mean values derived from the raw data from this it is possible to calculate the gdp aid relationship for each country for the second and third period the procedure for deriving these relationships is as follows for each country the mean values of the time series of gdp and aid are extracted from the data for i 960 70 and for i 970 80 using i 960 70 as the base the signs of the change in the levels of the gdp and aid mean values between periods are recorded this is repeated for i980 4 with i970 80 mean values as the base the relationship between the two signs is an indication of the effect of aid on gdp in the period in which the change in levels is effected thus in the case of an increase in aid being combined with a decrease in gdp the latter must have fallen relatively to the former and aid effectiveness is negative mutatis mutandis for the other three sign combinations thus generating the appropriate gdp aid relationship for each country in each period a frequency distribution of the four sign combinations relating to the full sample is presented in table i since the signs of the changes in the levels of gdp and aid are derived by making explicit the arithmetic relationship implicit in the data they form a valid base from which to draw conclusions without requiring any test of

do inequality unemployment and deterrence affect crime over the long run abstractdo inequality unemployment and deterrence affect crime over the long run regional studies this paper investigates the long run relationship between crime inequality unemployment and deterrence using us state level data from 1978 to 2013 the novelty is to use non stationary panels with a factor structure the results show that 1 a crime theoretical model fits the long run relationship well 2 income inequality and unemployment have a positive impact on crime whereas that of deterrence is negative 3 the effect of income inequality on crime is larger when inequality is measured on a wider population proportion and 4 property crime is generally highly sensitive to the deterrence effect of police

does aid affect inequality we show that there was a negative correlation between pro poor aid and inequality in the period before the mid 2000s this article provides an explanation for this observed relationship using pane

the political economy of foreign aid a model of the market for a public good what determines the type and quantity of overseas aid given by individual donor countries answers to this question in the existing literature are polarized into two groups one of them offers a theoretical treatment based on the theory of public goods which is not consistent with the available data and the other offers empirical correlations without any explanatory theory the first group for example pincus and olson and zeckhauser treats aid like defense as an international public good small countries on this approach are free riders spending relatively little themselves while deriving benefits from the expenditures of larger countries but this approach is not consistent with even a casual scrutiny of the oecd aid community in which broadly speaking the smallest countries are the most generous donors 2 the second group for example hoadley and beenstockdiscover correlations between a country s ratio of aid to gnp and certain independent variables which may be expected to influence it e g that country s gnp its dependence on foreign trade its government s position in the ideological spectrum and the state of the domestic economy 3 however these findings are not fitted into any theoretical framework so that it is difficult to work out what they really mean 4 the approach of this paper is to treat foreign aid as a public good for which there is a market albeit a highly imperfect one because the consumers donor country taxpayers are ignorant about the very nature let alone the price of the commodity they are buying on this view factors on the demand side i e taxpayers response to their country s aid program will help to determine the quantity of aid disbursed as well as factors on the supply side such as the donor government s desire to obtain strategic or trading benefits from aid this view

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

the aid effectiveness literature the sad results of 40 years of research abstract the aid effectiveness literature ael consists of empirical macroeconomic estimates of the effects of development aid by the end of 2004 it comprised 97 econometric studies of three families of related effects each family has been analyzed in a separate meta analysis the ael is an ideal subject for meta analysis as it uses only a few formally similar models to estimate the same underlying effects it is also an area with strong beliefs often generated by altruism when this whole literature is examined a clear pattern emerges after 40 years of development aid the preponderance of the evidence indicates that aid has not been effective we show that the distribution of results is significantly asymmetric reflecting the reluctance of the research community to publish negative results the dutch disease effect on exchange rates provides a plausible explanation for the observed aid ineffectiveness

empirical results of aid motivations australia s bilateral aid program abstract this paper briefly surveys the existing literature on the motivations of overseas aid the emphasis is on the two competing models of recipient need and donor interest and the paper estimates these two models using data for australian bilateral aid both the recipient need model and the donor interest model are supported by the econometric analysis this is in stark contrast to the results of other studies for large states such as the united states and the united kingdom these prior studies show no support for the recipient need model whereas the donor interest model is supported the atypical result for the australian bilateral aid program requires further analysis in terms of non nested hypotheses

decision ambiguity and incumbent brand advantage this article examines the role of decision ambiguity in judgments that consumers make about an incumbent the brand a consumer currently uses versus an attack brand a new superior competitor it is hypothesized that decision ambiguity creates an advantage for the incumbent a conceptualization of decision ambiguity is offered in three experiments factors that can cause decision ambiguity are manipulated and their effects on preference for the incumbent are investigated the results underscore the role of decision ambiguity in incumbent brand advantage in two other experiments boundary conditions are examined t his research focuses on the advantages of incumbency the term incumbent refers to the brand that a consumer first chooses in a product category a brand may achieve incumbent status by being the first brand chosen by consumers entering a mature product class or by being a pioneer in a new product class an incumbency advantage occurs when consumers prefer the incumbent to an objectively superior but later encountered competitor referred to as the attack brand the objectives of this research are to examine conditions under which an incumbent advantage obtains and to conduct an exploratory investigation of the psychological processes that underlie it research in marketing has not been specific about either the processes or the conditions that result in an incumbency advantage although research on the related topic of brand loyalty has emphasized the role of emotional commitment or ego involvement in repeat purchase behavior e g jacoby 197 1 jacoby and chestnut 1978 other psychological processes are surely operative on the basis of behavioral decision theory research i propose a framework that offers a different explanation for consumer repeat purchase behavior in addition this framework offers an explanation of the pioneering advantage that is consistent with but independent of prior research e g carpenter and nakamoto 1989 kardes and kalyanaram 1992 schmalensee 1982 with a few notable exceptions in the domain of the pioneering advantage carpenter and nakamoto 1989 kardes and kalyanaram 1992 kardes et al 1993 research in marketing has not provided a psychological account of the incumbency advantage however behavioral decision theory research offers some suggestions for example samuelson and zeckhauser 1988 showed that people prefer a previously chosen option over others this pervasive tendency labeled the status quo bias has been demonstrated across a range of decisions samuelson and zeckhauser 1988 invoked a variety of psychological mechanisms to explain the phenomenon including commitment induced by sunk costs regret avoidance cognitive misperception and feeling of control however samuelson and zeckhauser 1988 were silent with respect to conditions that would make such biases present absent or even reversed cf biehal and chakravarti 1983 the present research identifies the decision characteristics that can increase or decrease the likelihood of the status quo bias the central premise of this research is that the incumbency advantage will vary as a function of the level of ambiguity in the decision environment

foreign aid and public goods abstract most less developed countries ldcs use foreign economic aid to finance public consumption goods or public intermediate inputs this paper constructs a two country general equilibrium trade model where an income transfer that takes place between the two countries is used by the recipient to finance a public consumption good within this framework the paper identifies the conditions under which the income transfer improves or deteriorates the donor country s terms of trade and shows that the transfer can be welfare enriching for the donor and welfare immiserizing for the recipient country the paper also demonstrates that the transfer can raise reduce world welfare in which case a welfare increase decrease in both the donor and the recipient country is possible

dynamic effects of the order of entry on market share trial penetration and repeat purchases for frequently purchased consumer goods a time series cross sectional analysis of 18 successful later entrants in 8 categories of consumer packaged goods over the period from october 1983 to january 1988 confirms previous empirical findings that after correcting for differences in marketing effort later entrants suffer a long term market share disadvantage new evidence of the penalties associated with later entry are found in statistical estimation of models of cumulative trial first repeat and subsequent repeat purchasing significantly lower asymptotic levels are found in both trial and repeat behavior however based on this data the rate of approach of later entrants to their lower asymptotic performance measures is either equal to or faster than early entrants and provides evidence of a compensating partial effect accrued by later entrants

why foreign economic assistance there is general agreement in the economics literature that resource flows among countries in response to market incentives enhance global economic efficiency and welfare in both rich and poor countries it has also been argued that in the presence of capital market imperfections the transfer of resources from developed country governments to the governments of developing countries on commercial terms either directly or through multilateral agencies can normally be expected to be welfare enhancing in both developed and developing countries 1 these arguments do not apply however to official development assistance that involves a substantial grant element two arguments have typically been used in support of transfers that include a grant component one set is based on the economic and strategic self interest of the donor country the second is based on the ethical or moral responsibility of the residents of wealthy countries toward the residents of poor countries both sets of arguments have been the subject of continuous challenge i argue in this article that neither the donor self interest nor the ethical responsibility argument can be rejected on logical or theoretical grounds i also assert that the empirical evidence in support of both the economic and the strategic self interest arguments is exceedingly weak the ethical responsibility arguments impose less burden on the empirical evidence but they are subject to continuous challenge by political theorists and moral philosophers donor self interest

a paradox of redistribution in international aid the determinants of poverty oriented development assistance summary donors differ in the amount of official development assistance dedicated to poverty reduction we investigate the causes of variation over time and donors by employing both a regression approach with aggregate data on bilateral aid and two short country studies on germany and the united kingdom we find that there is a trade off between the total amount of money given and the amount of money given to poor countries the trade off is similar to the paradox of redistribution of targeting vs redistribution in rich welfare states case study evidence illustrates how countries have managed this tradeoff

on aid growth and good policies this study provides a critical analysis of the growth regressions in burnside and dollar 2000 first we analyse the relationship between aid and government expenditure in a modified neo classical growth model one of the main results of the analysis is that while good policies spur growths they may at the same time reduce the effectiveness of foreign aid second we show that the econometric results in burnside and dollar emphasising the crucial role of interaction between aid and good policies in the growth process are fragile as they are extremely data dependent finally we demonstrate that the burnside and dollar data lend support to the idea that the association between aid and growth can be approximated by decreasing returns to aid this finding conforms well to regression results in other recent studies

a two part sample selection model of british bilateral foreign aid allocation the allocation of british bilateral foreign aid among developing countries is simultaneously modelled focusing on allocations during the period 1980 87 two aid allocation decisions are analysed using a variant of the lee maddala econometric model the first decision concerns the determination of developing country eligibility for aid while the second concerns the amount of aid eligible countries are allocated given the implied two part decision making process sample selection techniques are employed it is hypothesized that british bilateral aid eligibility and amount decisions are based on bristain s humanitarian commercial and political interests in developing countries results obtained indicate that these decisions are generally consistent with each of these interests especially those relating to the political importance of commonwealth members

on the provision of official and private foreign aid abstract the provision of official relative to private foreign aid varies considerably between donor countries we explain the variations in terms of country size household composition income distribution and the government s ability to commit to aid and derive inter alia the results 1 official aid crowds out private aid 2 total aid and official aid collected from each household are lower in more populous countries 3 total aid is lower if i the distribution of income favors the more altruistic households and ii the government can credibly commit to a certain level of aid evidences suggest that the theoretical results can explain stylized facts

brand retrieval consideration set composition consumer choice and the pioneering advantage recent research on the pioneering advantage has shown that consumers often prefer pioneering brands to follower brands recent research on consumer choice suggests that information about brands is filtered through a series of sequential cognitive processes this study attempts to integrate these two separate lines of research by investigating the effects of pioneering on each stage of the multistage decision process a within subjects longitudinal experiment was conducted to simulate brand order of entry into a new market we also developed a sequential logit model to isolate the direct impact of pioneering on each stage of the decision process while controlling for indirect effects of pioneering on previous stages the results revealed that the pioneering brand vs followers is more likely to be retrieved considered and selected moreover the results revealed that consumers are more likely to bypass consideration set formation when the choice decision is simple vs complex theoretical and practical implications of the results are discussed

the effect of police response time on crime clearance rates police agencies devote vast resources to minimizing the time that it takes them to attend the scene of a crime despite this the long standing consensus is that police response time has no meaningful effect on the likelihood of catching offenders we revisit this question using a uniquely rich dataset from the greater manchester police to identify causal effects we use a novel strategy that exploits discontinuities in distance to the response station across locations next to each other but on different sides of division boundaries contrary to previous evidence we find large and strongly significant effects in our preferred estimate a 10 increase in response time leads to a 4 7 percentage points decrease in the likelihood of clearing the crime we find stronger effects for thefts than for violent offences although the effects are large for every type of crime we find suggestive evidence in support of two mechanisms the likelihood of an immediate arrest and the likelihood that a suspect will be named by a victim or witness both increase as response time becomes faster we argue that under conservative assumptions hiring an additional response officer would generate a benefit in terms of future crime prevented equivalent to 170 of her payroll cost

aid policies and growth comment in an extraordinarily influential paper craig burnside and david dollar 2000 p 847 find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies but has little effect in the presence of poor policies this finding has enormous policy implications the burnside and dollar 2000 henceforth bd result provides a role and strategy for foreign aid if aid stimulates growth only in countries with good policies this suggests that 1 aid can promote economic growth and 2 it is crucial that foreign aid be distributed selectively to countries that have adopted sound policies international aid agencies public policy makers and the press quickly recognized the importance of the bd findings this paper reassesses the links between aid policy and growth using more data the bd data end in 1993 we reconstruct the bd database from original sources and thus 1 add additional countries and observations to the bd data set because new information has become available since they conducted their analyses and 2 extend the data through 1997 thus using the bd methodology we reexamine whether aid influences growth in the presence of good policies given our focus on retesting bd we do not summarize the vast pre bd literature on aid and growth we just note that there was a long and inconclusive literature that was hampered by limited data availability debates about the mechanisms through which aid would affect growth and disagreements over econometric specification see gustav f papanek 1972 robert cassen 1986 paul mosley et al 1987 peter boone 1994 1996 and henrik hansen and finn tarp s 2000 review since bd found that aid boosts growth in good policy environments there have been a number of other papers reacting to their results including paul collier and jan dehn 2001 carljohan dalgaard and hansen 2001 patrick guillaumont and lisa chauvet 2001 hansen and tarp 2001 robert lensink and howard white 2001 and collier and dollar 2002 these papers conduct useful variations and extensions some of which had already figured in the pre bd literature such as introducing additional control variables using nonlinear specifications etc some of these papers confirm the message that aid only works in a good policy environment while others drive out the aid policy interaction term with other variables this literature has the usual limitations of choosing a specification without clear guidance from theory which often means there are more plausible specifications than there are data points in the sample we differentiate our paper from these others by not deviating from the bd specification thus we do not test the robustness of the results to an unlimited number of variations but instead maintain the bd methodology this paper conducts a very simple robustness check by adding new data that were unavailable to bd thus we expand the sample used over their time period and extend the data from 1993 to 1997 easterly department of economics new york university 269 mercer street new york ny 10003 center for global development and national bureau of economic research e mail william easterly nyu edu levine department of finance carlson school of management university of minnesota 321 19th avenue south minneapolis mn 55455 and national bureau of economic research e mail rlevine csom umn edu roodman center for global development 1776 massachusetts avenue nw washington dc 20036 e mail droodman cgdev org we are grateful to craig burnside for supplying data and assisting in the reconstruction of previous results without holding him responsible in any way for the work in this paper thanks also to francis ng and prarthna dayal for generous assistance with updating the sachs warner openness variable and to three anonymous referees craig burnside and henrik hansen for helpful comments 1 see for instance the world bank 1994 2001 2002 the u k department for international development 2000 president george w bush s speech march 16 2002 the announcement by the white house on creating the millennium challenge corporation white house 2002 as well as a washington post editorial february 9 2002 a financial times column by alan beattie march 11 2002 and the economist march 16 2002

poverty in america trends and explanations despite robust growth in real gdp per capita in the last three decades u s poverty rates have changed very little we summarize some basic facts about poverty in the united states relying on a combination of previously published data from the census bureau and our own tabulations based on current population survey data we then discuss and evaluate four determinants of changes in the poverty rate that have been advanced in the literature the impact of labor market opportunities the role of changes in family structure the role played by government antipoverty programs and the role of immigration

aid quality and donor rankings this paper offers new measures of aid quality covering 38 bilateral and multilateral donors as well as new insights about the robustness and usefulness of such measures the 2005 paris declaration on aid effectiveness and the follow up 2008 accra agenda for action have focused attention on common donor practices that reduce the development impact of aid using 18 underlying indicators that capture these practices derived from the oecd dac s survey for monitoring the paris declaration the new aiddata database and the dac aid tables the authors construct an overall aid quality index and four coherently defined sub indexes on aid selectivity alignment harmonization and specialization compared with earlier indicators used in donor rankings this indicator set is more comprehensive and representative of the range of donor practices addressed in the paris declaration improving the validity reliability and robustness of rankings one of the innovations is to increase the validity of the aid quality indicators by adjusting for recipient characteristics donor aid volumes and other factors despite these improvements in data and methodology the authors caution against overinterpretation on overall indexes such as these alternative plausible assumptions regarding weights or the inclusion of additional indicators can still produce marked shifts in the ranking of some donors so that small differences in overall rankings are not meaningful moreover because the performance of some donors varies considerably across the four sub indexes these sub indexes may be more useful than the overall index in identifying donors relative strengths and weaknesses

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

climbing out of poverty falling back in measuring the persistence of poverty over multiple spells this paper investigates the persistence of poverty over individuals life times using a hazard rate approach that accounts for multiple spells of poverty and incorporates spell duration individual and household characteristics and unobserved heterogeneity the findings highlight the importance of considering multiple spells in an analysis of poverty persistence with half of those who end poverty spells returning to poverty within four years accounting for multiple spells shows that approximately 50 percent of blacks and 30 percent of whites falling into poverty in some year will have family income below the poverty line in five or more of the next ten years

save the poor shoot some bankers bilateral or multilateral organizations control about 90 of official overseas development assistance oda much of which is wasted this note traces aid failure to the daisy chain of principal agent beneficiary relationships linking rich donors to aid bureaucrats to poor recipients waste results when aid middlemen un intentionally misdirect oda waste can be reduced by clarifying domestic goals for oda using fewer middlemen with greater intrinsic motivation empowering recipients and or replacing bureaucracy with markets

inequality and institutions abstract this paper presents theory and evidence on the relationship between inequality and institutional quality we exhibit a model in which the two may dynamically reinforce each other and set to test this relationship with a broad array of institutional measures the double causality between institutional strength and a more equal distribution of income is empirically established using dynamic panel and linear feedback analysis

aid and growth what does the cross country evidence really show abstract we examine the effects of aid on growth in cross sectional and panel data after correcting for the possible bias that poorer or stronger growth may draw aid contributions to recipient co

aid flows and the international transfer problem in a structuralist north south model this paper analyzes the impact of increased aid flows from industrial to developing countries on growth in transferr ing and recipient countries one key variable in the analysis is the ter ms of trade which links the analysis to the classic transfer debate th e analysis is centered around policy simulations with a small structuralist general equilibrium model of north south interactions simulation exercises for a doubling of official development assistan ce up to the dac target of 0 7 percent of the gnp of the industrialized countries show the great sensitivity of the global adjustment proces ses to the way in which these transfers are financed the model results suggest that deficit financing under monetary constraints may trigge r a global recession and a secondary burden falls on the recipient countries in the form of a strong decline in their terms of trade tax financing or financing of the aid transfer through budget cuts can help to avoid the global recessionary effects and recipients may gai n from the aid transfer evidently the global economic environment an d macroeconomic policies in the industrialized countries are an import ant component in determining the effectiveness of aid to developing countries copyright 1993 by royal economic society

explaining international and intertemporal variations in income inequality this paper explores the propositions that income inequality is relatively stable within countries and that it varies significantly among countries a new and expanded data set provides broad support for both propositions drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality the empirical analysis shows that the predicted variables associated with the first argument a measure of civil liberties and the initial level of secondary schooling and the second argument a measure of financial depth and the initial distribution of land are indeed important determinants of inequality this paper explores two propositions regarding income inequality they are first income inequality is relatively stable within countries and second it varies significantly across countries to illustrate note that the gini coefficient in india remained almost constant for forty years 1951 92 with mean 32 6 and standard deviation 2 0 2 in contrast the variation in gini coefficients across countries is large 61 9 in honduras in 1968 compared with 17 8 in bulgaria in 1976 if substantiated these propositions have potentially significant implications for poverty the significance of the first is obvious barring any fundamental socio political change poverty reduction will depend crucially on the rate of economic growth given this the significance of the second is that in inegalitarian economies the poor will enjoy a smaller share of any national increment in income than in more egalitarian ones drawing on a new and expanded data set on inequality deininger and squire 1996a the first of the paper s three sections conducts standard statistical tests of the two propositions the sample comprises 573 observations on the most common measure of inequality the gini coefficient for 49 developed and developing countries covering the period 1947 94 the results broadly confirm our two propositions specifically analysis of variance anova shows that about 90 of the total variance in the gini coefficients

aid and growth regressions this paper examines the relationship between foreign aid and growth in real gdp per capita as it emerges from simple augmentations of popular cross country growth specifications it is shown that aid in all likelihood increases the growth rate and this result is not conditional on good policy there are however decreasing returns to aid and the estimated effectiveness of aid is highly sensitive to the choice of estimator and the set of control variables when investment and human capital are controlled for no positive effect of aid is found yet aid continues to impact on growth via investment we conclude by stressing the need for more theoretical work before this kind of cross country regressions are used for policy purposes

do corrupt governments receive less foreign aid critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies supporters argue that foreign aid can be used to reward good governments this paper documents that there is no evidence that less corrupt governments receive more foreign aid on the contrary according to some measures of corruption more corrupt governments receive more aid also we could not find any evidence that an increase in foreign aid reduces corruption in summary the answer to the question posed in the title is no

first mover advantage through distribution a decomposition approach whereas the extant literature on entry order effects establishes that first entrants often earn higher market shares market share advantage the literature on distribution suggests that increased distribution has a positive effect on sales can distribution help us better understand entry order effects on market shares this paper examines how the first entrant in a geographical market achieves a market share advantage through distribution for this purpose i propose a simple method of decomposing sales into physical distribution and sales performance the data come from a manually collected panel on six major japanese convenience store chains from 47 geographical markets between 1991 and 2007 using an instrumental variable approach to address the potential endogeneity of entry order i find first entrants have a positive market share advantage over later entrants specifically the physical distribution measured by the number of outlets in a market drives most of the advantage meanwhile the pos

limited choice sets local price response and implied measures of price competition it is becoming increasingly evident that a consumer s brand choice decision in low involvement categories does not involve full search evaluation and comparison of price information of all brands available at point of purchase global price response the authors propose a two stage choice process in which the consumer first identifies a subset of brands within the universal set of brands called the choice set and then evaluates only those brands that are in the choice set relative to one another to select a single brand the authors find that consistent with reports of the extent of external price search of consumers response to shelf price variations is limited to the brands in the choice set local price response their results indicate that employing the assumption of global price response may lead to biased estimates of price elasticity and derived measures of clout and vulnerability to enable a managerially meaningful and useful assessment of a brand s competitive clout and vulnerability the