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Can foreign aid free the press?

Published online by Cambridge University Press:  02 February 2016

NABAMITA DUTTA  and
CLAUDIA R. WILLIAMSON
NABAMITA DUTTA*
Affiliation:
Department of Economics, University of Wisconsin, La Crosse, WI, USA
CLAUDIA R. WILLIAMSON*
Affiliation:
Department of Finance and Economics, Mississippi State University, Mississippi State, MS, USA
*
*Email: ndutta@uwlax.edu
**Email: claudia.williamson@msstate.edu
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Abstract

Can foreign aid help free the press? Aid may boost press freedom by incentivizing government to reduce media regulations and provide financial support for infrastructure. Alternatively, foreign aid may prevent press freedom by expanding the role of the state and promoting government over private enterprises. We contend that the magnitude of foreign aid's influence is conditional on the existence of democratic checks. Using panel data from 1994 to 2010, we find evidence suggesting that aid significantly increases press freedom in democracies but insignificantly relates to press freedom in autocracies. Collectively, the results suggest that a standard deviation increase in aid to a country at the mean level of democracy increases press freedom by approximately a 1/20th standard deviation. Overall, the findings suggest that donors should be cautious as most aid recipients are not democratic and aid leads to only relatively small marginal improvements in press freedom.

Type
Research Article
Information
Journal of Institutional Economics , Volume 12 , Issue 3 , September 2016 , pp. 603 - 621
Copyright
Copyright © Millennium Economics Ltd 2016 

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