Outline

The thesis comprises five sections that are intended for separate publication and are therefore referred to as papers. Three out of five papers are co-authored with Joerg Baten (chapters 2, 3, and 4). At the time of submission of this thesis, the papers of chapter two and three have been published. The other working papers are to be submitted in the near future.

The thesis is structured as follows: in chapter two, the educational inequality between rich and poor, as well as tall and short individuals is examined, putting a special focus on globalisation’s role in increasing or reducing educational inequality.

Furthermore, a modified Kuznets inverted U hypothesis, that is, increasing educational inequality with rising GDP p.c., is tested. While the paper focuses on Latin America for the 18^th to early 20^th century using a large body of new evidence on educational inequality, a broader range of countries is examined for the mid-20^th century. The results show that educational inequality in Latin America increased in the “First Era of Globalisation” (1850-1913) while the contrary is true for 20^th century globalisation for a broader sample of developing countries. Moreover, it is of note that large educational differences have not always existed in developing countries: the evidence shows that in

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Mexico, for example, differences in educational achievement between the richer and the poorer strata of the population was modest in the 18^th century but gradually increased over time. Strong evidence is found for Kuznets’ inverted U hypothesis, which was on the rise during the 18^th and 19^th centuries in Latin America and tended to fall in the second half of the 20^th century in the developing world.

In chapter three, the influence of absolute and relative deprivation – proxied by anthropometric measures – on civil war risk is examined. The study takes a long-term view, analysing civil wars from 1816 to 1999 for a global sample. Studies that assessed the relationship between average income or income inequality and civil war onset have often been limited by severe data problems for the conflict-struck and poor world regions; in particular, inequality indicators are rarely available for countries of interest (Miguel et al. 2004; Fearon and Laitin 2003). The problem of data scarcity is overcome here by using an extensive data base for inequality in well-being. The results indicate that inequality was a major trigger of civil war for the period and countries under research. The evidence for the correlation between absolute welfare levels and the probability of civil war outbreak turns out to be less clear.

Chapter two and three show that inequality is one of the main obstacles to poor countries’ social and economic development. The second half of this thesis therefore focuses on certain efforts that have been undertaken by the international community to reduce inequality so far. One possibility to fight inequality and poverty in general is to provide foreign aid to developing countries. Chapter four, five and six seek to give an answer to the question whether attempts to reduce poverty and thereby inequality by providing foreign aid had positive impacts on recipients’ well-being or rather produced adverse effects for the recipient country and its inhabitants.

In chapter four, the focus is put on the impacts of overall official development assistance (ODA) on recipients’ well-being. Previous studies mostly used GDP per capita growth to assess whether aid has welfare-enhancing effects. However, as was already pointed out by the opening quote of this thesis, development is not only about transforming economies, but rather about transforming the lives of people. Therefore, anthropometric indicators are once again used as outcome variables. It can be shown that foreign aid had a significantly negative short-term effect on well-being in the 1960s

1. Introduction

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to late-1970s. The negative effect becomes insignificant for later periods of time.

Slightly more favourable results are found when a long-term perspective is taken, indicating that it might take some time until investments in development pay off.

Moreover, the results suggest that foreign aid has become more efficient over time, although positive outcomes are still counter-balanced by adverse effects.

In the two subsequent chapters, I take a more specific look at food aid. Food aid may improve the nutritional intake of the poorer strata of the population, thereby reducing inequality. This special form of foreign assistance has triggered heated debates for decades but very few empirical studies have been produced to confirm or refute the – mostly negative – presumptions about food aid’s effects (Awokouse 2010; Barrett 2001; Lavy 1990; Schultz 1960). The specific impacts of food aid on malnutrition and stunting of children in recipient countries are assessed in chapter five. The results show that food aid is positively and significantly correlated with the percentage of children that are not stunted for the post-1995 period. Children’s weight, which is reacting more promptly than height, is not found to be significantly affected by foreign food provisions. As a substantial literature has commented on the fact that nutritional support by different donors might have substantially different outcomes, this discussion point is also examined by taking a closer look at the two most important food aid donors: the United States and multilateral organisations. However, the impact of nutritional support on recipients’ well-being does not differ significantly among donors, according to the results. To cut a long story short, while this thesis cannot give the final answer regarding the impacts of food aid on well-being, it contributes to the discussion by providing empirical results for the relationship between nutritional support and anthropometric indicators.

In chapter six, I look at the effects of food aid from a different angle: the question whether food aid has adverse effects on the recipient countries’ agriculture is empirically examined. More specifically, the chapter takes a closer look at the persistent concern that food aid creates producer disincentives in recipient countries by increasing food supply and thereby lowering local food prices. Another major concern that has frequently been raised is that nutritional support might shift recipient governments’

investments away from the local agriculture, thus reducing agricultural productivity. I

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therefore provide an empirical assessment of whether food aid actually decreased food production in general and wheat production in particular (as wheat plays a major role with regard to in-kind food aid provisions) for a global sample from the mid-1970s to late-2000s. It turns out that I cannot support the mostly negative results put forward by prominent scholars like Schultz (1960). In fact, giving more food aid does not cause lower overall food production but is rather positively related to wheat output one year after the nutritional support was provided. Chapter seven summarises the findings and provides directions for future research.