Type of Document	Dissertation
Author	Connors, Joseph
Author's Email Address	jconnors@fsu.edu
URN	etd-08012011-111952
Title	Global Poverty: The Role of Economic Freedom, Democracy, and Foreign Aid
Degree	Doctor of Philosophy
Department	Economics, Department of
Advisory Committee	Advisor Name Title James Gwartney Committee Co-Chair Thomas Zuehlke Committee Co-Chair Bruce Benson Committee Member Mark Isaac Committee Member Charles Barrilleaux University Representative
Keywords	Global Poverty Economic Freedom Institutions Democracy Foreign Aid Political Institutions Economic Institutions Extreme Poverty Moderate Poverty $1 Poverty Rate $2 Poverty Rate Development Geography
Date of Defense	2011-06-15
Availability	unrestricted
Abstract This research is an empirical study of how economic freedom, democratic political institutions, and foreign aid influence global poverty rates. The updated extreme and moderate poverty rates recently released by the World Bank indicate that significant reductions in global poverty occurred during 1980-2005. Chapter two regularizes these data for statistical analysis in later chapters. This chapter also looks at global poverty trends over time, both in aggregate and for various regions. The data indicate that Asia had remarkable reductions in poverty during 1980-2005. The world’s two most populous countries, China and India, were the primary drivers of these reductions. Latin America also experienced reductions in poverty rates over the period while sub-Saharan Africa achieved very little reductions in poverty. Using the World Bank poverty rates, chapter three examines the impact of economic freedom on global poverty during 1980-2005. Prior research indicates that economic freedom is a significant determinant of economic growth. Some argue that only the wealthy are able to take advantage of movements toward increased economic freedom. The results of this chapter indicate that the poor benefit from economic freedom as well. Countries with more economic freedom over the period 1980-2005 had lower poverty rates in 2005. Moreover, movements toward institutions consistent with economic freedom corresponded to larger reductions in poverty over the period. This was especially true for changes in economic freedom that occurred earlier in the period. Prior research indicates that democratic political institutions exert very little influence on economic outcomes after accounting for the impact of economic freedom. Chapter four examines whether democratic political institutions exert an indirect impact on reductions in poverty through economic freedom. Milton Friedman and others have argued that political institutions exert an impact on economic freedom. This research provides some evidence in support of this view. Movements toward democratic political institutions in one decade corresponded to increases in economic freedom in the subsequent decade. After accounting for the indirect impact of political institutions, the results indicate that movements toward democracy exert an influence on subsequent reductions in extreme poverty through economic freedom. A similar result was not found for reductions in moderate poverty. Chapter five examines the impact of foreign aid on global poverty during 1980-2005. Over the last half century, a significant amount of foreign aid was given to developing countries to reduce the incidence of poverty. The results of this chapter indicate that a countries poverty rate is an important determinate of the amount of aid received. Economic and political institutions of a recipient country had little to no impact on the allocation of foreign aid. The results also indicate that foreign aid exerted little influence on movements toward economic freedom or democracy. Lastly, the results of this chapter indicate that foreign aid exerted little to no impact on reductions in either extreme or moderate poverty during 1980-2005. These results indicate that poor countries receive foreign aid, but do not become economically free or democratic. Moreover, it appears that aid, as historically practiced, exerted little impact on global poverty. Chapter six is the concluding chapter. The empirical results are summarized and placed in context. This research indicates that economic freedom is a significant determinant of reductions in poverty. Democratic political institutions facilitate reductions in the extreme poverty rate through changes in economic freedom. Lastly, no evidence was found that foreign aid exerted a significant impact on either institutions or poverty.
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