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On the effectiveness of foreign aid in institutional quality

Author

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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.

Suggested Citation

  • Asongu, Simplice A., 2013. "On the effectiveness of foreign aid in institutional quality," European Economic Letters, European Economics Letters Group, vol. 2(1), pages 12-19.
  • Handle: RePEc:ris:eueclt:0008
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Foreign Aid; Political economy; Development; Africa;

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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