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Understanding the link between aid and corruption: A causality analysis

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  • Menard, Audrey-Rose
  • Weill, Laurent

Abstract

This paper addresses the direction of the causal link between aid and corruption. We perform Granger causality tests in a dynamic GMM panel framework to evaluate the sign and direction of causality between aid and corruption on a dataset of 71 developing countries over the period 1996–2009. We find no significant causal relation between aid and corruption running in either direction. Our results are robust to various controls.

Suggested Citation

  • Menard, Audrey-Rose & Weill, Laurent, 2016. "Understanding the link between aid and corruption: A causality analysis," Economic Systems, Elsevier, vol. 40(2), pages 260-272.
    • Handle: RePEc:eee:ecosys:v:40:y:2016:i:2:p:260-272
    DOI: 10.1016/j.ecosys.2016.01.001
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    2. Rezwanul Hasan Rana & Khorshed Alam & Jeff Gow, 2020. "Health expenditure and gross domestic product: causality analysis by income level," International Journal of Health Economics and Management, Springer, vol. 20(1), pages 55-77, March.
    3. Dokas, Ioannis & Panagiotidis, Minas & Papadamou, Stephanos & Spyromitros, Eleftherios, 2023. "Does innovation affect the impact of corruption on economic growth? International evidence," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 1030-1054.
    4. Ertan Tosun & Dervis Kirikkaleli & Okan Veli Safakli, 2020. "An Isolated Island Economy Analysis on the Effectiveness of Foreign Aid: TRNC," SAGE Open, , vol. 10(2), pages 21582440209, June.
    5. Dijkstra, Geske, 2018. "Aid and good governance: Examining aggregate unintended effects of aid," Evaluation and Program Planning, Elsevier, vol. 68(C), pages 225-232.

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    More about this item

    Keywords

    Aid; Corruption; Granger causality;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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