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On the effectiveness of foreign aid in institutional quality

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  • Asongu Simplice

    ()
    (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

Paper provided by African Governance and Development Institute. in its series Working Papers with number 0001.

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Length: 13 pages
Date of creation: Jan 2013
Date of revision: Jan 2013
Publication status: Published in the European Economics Letters
Handle: RePEc:agd:wpaper:0001

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

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References

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  1. 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.
  2. Simplice A, Asongu, 2011. "Law, democracy and the quality of government in Africa," MPRA Paper 35502, University Library of Munich, Germany.
  3. Svensson, Jakob, 1998. "Foreign aid and rent-seeking," Policy Research Working Paper Series 1880, The World Bank.
  4. 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.
  5. Simplice A Asongu, 2012. "On the effect of foreign aid on corruption," Economics Bulletin, AccessEcon, vol. 32(3), pages 2174-2180.
  6. Simplice A, Asongu, 2012. "Government quality determinants of stock market performance in African countries," MPRA Paper 39631, University Library of Munich, Germany.
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  9. Alesina, Alberto & Weder, Beatrice, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," Scholarly Articles 4553011, Harvard University Department of Economics.
  10. Asongu Simplice, 2012. "Fighting corruption in Africa: do existing corruption-control levels matter?," Working Papers 12/012, African Governance and Development Institute..
  11. Okada, Keisuke & Samreth, Sovannroeun, 2012. "The effect of foreign aid on corruption: A quantile regression approach," Economics Letters, Elsevier, vol. 115(2), pages 240-243.
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  16. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  17. 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.
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  19. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
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Citations

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Cited by:
  1. Asongu Simplice & Mohamed Jellal, 2013. "On the channels of foreign aid to corruption," Working Papers 13/018, African Governance and Development Institute..
  2. Asongu Simplice & Oasis Kodila-Tedika, 2013. "Trust and Prosperity: A Conditional Relationship," Working Papers 13/024, African Governance and Development Institute..
  3. Asongu, Simplice A, 2013. "Consult your gods: the questionable economics of development assistance in Africa," MPRA Paper 48475, University Library of Munich, Germany.
  4. Asongu Simplice, 2013. "Determinants of Health Professionals’ Migration in Africa: a WHO based Assessment," Working Papers 13/034, African Governance and Development Institute..
  5. Asongu Simplice, 2012. "Development thresholds of foreign aid effectiveness in Africa," Working Papers 12/010, African Governance and Development Institute..
  6. 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.
  7. Asongu, Simplice A., 2013. "How do institutions matter in the income-equalizing effect of mobile phone penetration?," European Economic Letters, European Economics Letters Group, vol. 2(2), pages 56-61.

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