The Political Effects of Economic Programs

Some Indications from Latin America

by Charles Wolf, Jr.

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Conjectures about the relations between economic development and political effects have been a long-standing part of the foreign aid debate. As background for the empirical work discussed in this Memorandum, some of these conjectures are summarized. Several of the hypotheses are then tested in a preliminary way, using indicators of political development in Latin America and a number of economic indicators relating to the Latin American countries from 1950 to 1960. These indicators are: (1) total U.S. economic aid and per capita aid; (2) average annual GNP and per capita GNP; (3) annual gross investment and per capita investment; (4) gross investment as a proportion of GNP; and (5) annual rate of growth in GNP and in per capita GNP. The meaning and interpretation of the test results are then summarized.

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