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On the effectiveness of foreign aid in institutional quality

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  • Asongu, Simplice A.

    ()
    (African Governance and Development Institute, P.O. Box 18 SOA/ 1365 Yaoundé, Cameroon.)

Abstract

We extend the Okada & Samreth (2012, EL) and Asongu (2012, EB) debate on ‘the effect of foreign aid on corruption’ by: not partially negating the former’s methodological underpinning (as in the latter’s approach) with a unifying empirical framework and; broadening the horizon of inquiry from corruption to eight institutional quality dynamics (rule of law, regulation quality, government effectiveness, democracy, corruption, voice & accountability, control of corruption and political stability). Core to this extension is a hypothetical contingency of the ‘institutional perils of foreign aid’ on existing institutional quality such that, the institutional downside of development assistance maybe questionable when greater domestic institutional development has taken place. Based on the hypothesis of institutional thresholds for foreign aid effectiveness, the perilous character of development assistance to institutional quality is broadly confirmed in 53 African countries for the period 1996-2010.

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Bibliographic Info

Article provided by European Economics Letters Group in its journal European Economic Letters.

Volume (Year): 2 (2013)
Issue (Month): 1 ()
Pages: 12-19

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Handle: RePEc:ris:eueclt:0008

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Keywords: Foreign Aid; Political economy; Development; Africa;

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  1. Simplice A. Asongu, 2012. "Fighting corruption in Africa: do existing corruption-control levels matter?," International Journal of Development Issues, Emerald Group Publishing, Emerald Group Publishing, vol. 12(1), pages 36-52, February.
  2. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
  3. Okada, Keisuke & Samreth, Sovannroeun, 2011. "The effect of foreign aid on corruption: A quantile regression approach," MPRA Paper 27969, University Library of Munich, Germany.
  4. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  5. Alesina, Alberto & Weder, Beatrice, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," Scholarly Articles 4553011, Harvard University Department of Economics.
  6. Dollar, David & Alesina, Alberto, 2000. "Who Gives Foreign Aid to Whom and Why?," Scholarly Articles 4553020, Harvard University Department of Economics.
  7. Martin Mühleisen & Dhaneshwar Ghura & Roger Nord & Michael T. Hadjimichael & E. Murat Ucer, 1995. "Sub-Saharan Africa," IMF Occasional Papers 118, International Monetary Fund.
  8. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
  9. Simplice A Asongu, 2012. "On the effect of foreign aid on corruption," Economics Bulletin, AccessEcon, vol. 32(3), pages 2174-2180.
  10. Svensson, Jakob, 1998. "Foreign aid and rent-seeking," Policy Research Working Paper Series 1880, The World Bank.
  11. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
  12. Simplice A, Asongu, 2012. "Government quality determinants of stock market performance in African countries," MPRA Paper 39631, University Library of Munich, Germany.
  13. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  14. Simplice A, Asongu, 2011. "Law, democracy and the quality of government in Africa," MPRA Paper 35502, University Library of Munich, Germany.
  15. Paul Mosley & John Hudson & Sara Horrell, 1992. "Aid, the public sector and the market in less developed countries: A return to the scene of the crime," Journal of International Development, John Wiley & Sons, Ltd., vol. 4(2), pages 139-150, 03.
  16. Billger, Sherrilyn M. & Goel, Rajeev K., 2009. "Do existing corruption levels matter in controlling corruption?: Cross-country quantile regression estimates," Journal of Development Economics, Elsevier, vol. 90(2), pages 299-305, November.
  17. Pedersen, Karl R, 1996. " Aid, Investment and Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(3), pages 423-38.
  18. Rajeev K. Goel & Michael A. Nelson, 2005. "Economic Freedom Versus Political Freedom: Cross-Country Influences On Corruption ," Australian Economic Papers, Wiley Blackwell, vol. 44(2), pages 121-133, 06.
  19. Kodila Tedika, Oasis, 2012. "Empirical Survey on the Causes of the Corruption
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Citations

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Cited by:
  1. Asongu Simplice, 2012. "Development thresholds of foreign aid effectiveness in Africa," Working Papers 12/010, African Governance and Development Institute..
  2. Asongu, Simplice A., 2013. "How do institutions matter in the income-equalizing effect of mobile phone penetration?," European Economic Letters, European Economics Letters Group, European Economics Letters Group, vol. 2(2), pages 56-61.
  3. Asongu Simplice, 2013. "Consult your gods: the questionable economics of development assistance in Africa," Working Papers 13/002, African Governance and Development Institute..
  4. Asongu Simplice & Mohamed Jellal, 2013. "On the channels of foreign aid to corruption," Working Papers 13/018, African Governance and Development Institute..
  5. Asongu, Simplice, 2013. "Determinants of Health Professionals’ Migration in Africa: a WHO based Assessment," MPRA Paper 56802, University Library of Munich, Germany.
  6. Asongu, Simplice A & Jellal, Mohamed, 2014. "International aid, corruption and fiscal policy behavior," MPRA Paper 58750, University Library of Munich, Germany.
  7. Asongu Simplice, 2014. "The Evolving Debate on the Effect of Foreign Aid on Corruption and Institutions in Africa," Working Papers 14/009, African Governance and Development Institute..
  8. Asongu, Simplice A. & Kodila-Tedika, Oasis, 2013. "Trust and Prosperity: A Conditional Relationship," MPRA Paper 46865, University Library of Munich, Germany, revised 15 Jun 2013.
  9. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
  10. Asongu, Simplice A, 2013. "Fighting African corruption when existing corruption-control levels matter in a dynamic cultural setting," MPRA Paper 52209, University Library of Munich, Germany.

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