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Corrupt governments do not receive more state-to-state aid: Governance and the delivery of foreign aid through non-state actors

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  • Acht, Martin
  • Mahmoud, Toman Omar
  • Thiele, Rainer

Abstract

A core result of the aid allocation literature is that the quality of governance in recipient countries does not affect the amounts of foreign aid received. Donor countries may still give aid to poorly-governed countries because of a dilemma they face: those countries most in need typically also lack proper institutions. This paper argues that donors try to resolve this dilemma by delivering aid through non-state actors. Using aid shares as well as absolute amounts of aid allocated through state and non-state channels and considering different dimensions of governance, we provide evidence that bypassing governments via NGOs and multilateral organizations is indeed a response to weak recipient state institutions. The effect is stronger in aid sectors where donors can more easily switch between channels, and weaker for higher levels of economic self-interest among donors.

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  • Acht, Martin & Mahmoud, Toman Omar & Thiele, Rainer, 2015. "Corrupt governments do not receive more state-to-state aid: Governance and the delivery of foreign aid through non-state actors," Journal of Development Economics, Elsevier, vol. 114(C), pages 20-33.
  • Handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:20-33
    DOI: 10.1016/j.jdeveco.2014.11.005
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    Cited by:

    1. Minasyan, Anna & Nunnenkamp, Peter, 2015. "Donors' openness to immigration and the effectiveness of foreign aid," Kiel Working Papers 1983, Kiel Institute for the World Economy (IfW).
    2. Simone Dietrich & Amanda Murdie, 2017. "Human rights shaming through INGOs and foreign aid delivery," The Review of International Organizations, Springer, vol. 12(1), pages 95-120, March.
    3. Ramin Dadasov, 2017. "European Aid and Governance: Does the Source Matter?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(2), pages 269-288, April.
    4. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2019. "African leaders and the geography of China's foreign assistance," Journal of Development Economics, Elsevier, vol. 140(C), pages 44-71.
    5. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "The Effect of Leader’s Visits on Foreign Aid," MPRA Paper 99368, University Library of Munich, Germany.
    6. Marlène GUILLON & Jacky MATHONNAT, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers P225, FERDI.
    7. Lanati, Mauro & Thiele, Rainer, 2018. "The impact of foreign aid on migration revisited," World Development, Elsevier, vol. 111(C), pages 59-74.
    8. Ronelle Burger & Canh Thien Dang & Trudy Owens, 2017. "Better performing NGOs do report more accurately: Evidence from investigating Ugandan NGO financial accounts," Discussion Papers 2017-10, University of Nottingham, CREDIT.
    9. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Foreign aid and governance in Africa," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 69-88, January.
    10. Marlène GUILLON & Jacky MATHONNAT, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers P225, FERDI.
    11. Marlène GUILLON & Jacky MATHONNAT, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers 201710, CERDI.
    12. Marlène Guillon & Jacky Mathonnat, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Post-Print hal-01777484, HAL.
    13. Axel Dreher & Valentin F. Lang & Sebastian Ziaja, 2017. "Foreign Aid in Areas of Limited Statehood," CESifo Working Paper Series 6340, CESifo.
    14. Marlène Guillon & Jacky Mathonnat, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers halshs-01519715, HAL.
    15. Maiden, Emily & Brockway, Mark, 2018. "Parlez-vous français? Language and agricultural aid allocation strategies in northern Mali," World Development, Elsevier, vol. 106(C), pages 356-375.
    16. Matt Andrews, 2015. "Has Sweden Injected Realism into Public Financial Management Reforms in Partner Countries?," CID Working Papers 303, Center for International Development at Harvard University.
    17. Baydag, Rena Melis & Klingebiel, Stephan & Marschall, Paul, 2018. "Shaping the patterns of aid allocation: a comparative analysis of seven bilateral donors and the European Union," Discussion Papers 22/2018, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    18. Guillon, Marlène & Mathonnat, Jacky, 2020. "What can we learn on Chinese aid allocation motivations from available data? A sectorial analysis of Chinese aid to African countries," China Economic Review, Elsevier, vol. 60(C).
    19. Vera Z. Eichenauer & Bernhard Reinsberg, 2017. "What determines earmarked funding to international development organizations? Evidence from the new multi-bi aid data," The Review of International Organizations, Springer, vol. 12(2), pages 171-197, June.
    20. Eichenauer, Vera Z. & Fuchs, Andreas & Kunze, Sven & Strobl, Eric, 2019. "Distortions in aid allocation of United Nations flash appeals: Evidence from the 2015 Nepal earthquake," Kiel Working Papers 2120, Kiel Institute for the World Economy (IfW).
    21. Fuchs, Andreas & Öhler, Hannes, 2019. "Does private aid follow the flag? An empirical analysis of humanitarian assistance," Kiel Working Papers 2128, Kiel Institute for the World Economy (IfW).
    22. Marlène Guillon & Jacky Mathonnat, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers hal-01777484, HAL.
    23. Andrews, Matt, 2015. "Has Sweden Injected Realism into Public Financial Management Reforms in Partner Countries?," Working Paper Series 15-063, Harvard University, John F. Kennedy School of Government.

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    Keywords

    Aid allocation; Aid channels; Governance;

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