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Review of Development Economics· 2026Q1

Does Aid Harm or Benefit Institutional Quality? Time Heals All Wounds

Michael Chletsos, Sofia Tsarsitalidou

Short summary

Foreign aid initially harms institutional quality by enabling short-term expropriation of revenues, but this effect reverses after a few years as development benefits emerge, leading to a net positive impact.

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Field: Development

DevelopmentSocial Sciences