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The Independent Institute
Working Paper #60

Development Aid and Economic Freedom: Are They Related?

For more than 50 years individual countries and international agencies have given aid to third world countries to promote economic development, yet poverty still persists in many recipient nations. In recent years development economists and agencies have increasingly recognized the importance of institutions that support property rights and economic freedom in promoting development. Nevertheless, nations continue to provide aid to less developed countries. This raises two important questions. Does the receipt of aid lead to increases or decreases in economic freedom, and are increases in economic freedom rewarded with more aid or punished with reduced aid?
Benjamin Powell is a Senior Fellow at the Independent Institute, Director of the Free Market Institute at Texas Tech University. He Independent Institute books include The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, Housing America: Building out of Crisis, and Making Poor Nations Rich.

Matt Ryan is a Research Fellow with the Independent Institute and Assistant Professor of Economics at Duquesne University.