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Corruption, aid volatility & growth

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  • Jay Kathavate

    (University of Western Sydney)

Abstract

This paper revisits the debate on foreign aid effectiveness from a different perspective by analysing the role of institutional corruption on the effect of aid volatility on the output of developing nations. A simple political economy model is developed to show the effect of corruption on rent-seeking activities of incumbent legislators and their subsequent effect on country output. This phenomenon is empirically tested using data on 77 aid-receiving countries from the span of 1984 to 2007 using GMM to control for potential endogeneity.

Suggested Citation

  • Jay Kathavate, 2013. "Corruption, aid volatility & growth," Economics Bulletin, AccessEcon, vol. 33(2), pages 1159-1169.
    • Handle: RePEc:ebl:ecbull:eb-13-00226
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I2-P109.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Aid Volatility; Corruption; Political Economy; Growth;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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