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Does aid unpredictability weaken governance? Evidence from developing countries

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  • Thierry Kangoye

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper examines the effects of aid on governance from a different perspective by asserting that aid unpredictability can potentially increase corruption in recipient countries by providing incentives to risk-averse and corrupt political leaders to engage in rent-seeking activities. Analyses of data from 80 developing countries over the period 1984-2004 offer evidence that higher aid unpredictability is associated with more corruption as measured by a synthetic index. We also find further evidence that this latter impact is more severe in countries with weak initial institutional conditions. These findings are a supplementary advocacy for the need for better management and better predictability of aid flow in developing countries.

Suggested Citation

  • Thierry Kangoye, 2013. "Does aid unpredictability weaken governance? Evidence from developing countries," Post-Print halshs-00843756, HAL.
    • Handle: RePEc:hal:journl:halshs-00843756
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