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Institutional benchmarking of foreign aid effectiveness in Africa

  • Simplice A, Asongu

This paper integrates two main strands of the aid-development nexus in providing additional information as to why institutional benchmarks (thresholds) matter for the effectiveness of aid in institutional development. Using seven government-quality dynamics (rule of law, regulation quality, government-effectiveness, political-stability, voice & accountability, corruption-control and democracy), we provide a thorough assessment of the aid-development nexus when existing institutional development levels matter. Results which are consistent across specifications and conditional distributions of institutional variables have three broad implications (with respect to three tested hypotheses). (1) Institutional benefits of foreign-aid are contingent on existing institutional levels in Africa. (2) But for a thin exception, foreign-aid is instrumental in institutional development for countries with low levels of institutional quality. (3) Institutional quality benefits of development assistance are questionable in countries with high levels of institutional development. As a policy implication, blanket policies based on the aid-development nexus are unlikely to be appropriate; therefore policy measures should be contingent on prevailing levels of institutional development and tailored differently across best and worst countries in terms of institutional development.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38095.

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Date of creation: 13 Apr 2012
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Handle: RePEc:pra:mprapa:38095
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  2. Simplice A, Asongu, 2012. "On the effect of foreign aid on corruption," MPRA Paper 36545, University Library of Munich, Germany.
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  11. Simplice A, Asongu, 2012. "The political economy of development assistance: peril to government quality dynamics in Africa," MPRA Paper 36543, University Library of Munich, Germany.
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  15. Simplice A, Asongu, 2012. "Fighting corruption when existing corruption-control levels count : what do wealth-effects tell us in Africa?," MPRA Paper 42180, University Library of Munich, Germany.
  16. 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.
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  19. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers 44, Center for Global Development.
  20. Fielding, David & McGillivray, Mark & Torres, Sebastian, 2006. "A Wider Approach to Aid Effectiveness: Correlated Impacts on Health, Wealth, Fertility and Education," Working Paper Series RP2006/23, World Institute for Development Economic Research (UNU-WIDER).
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  24. Simplice A, Asongu, 2012. "Fighting consumer price inflation in Africa. What do dynamics in money, credit, efficiency and size tell us?," MPRA Paper 41553, University Library of Munich, Germany.
  25. 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.
  26. Asongu Simplice, 2012. "Reversed Economics and Inhumanity of Development Assistance in Africa," Working Papers 12/034, African Governance and Development Institute..
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  28. Asongu Simplice, 2012. "Are financial benefits of financial globalization questionable until greater domestic financial development has taken place?," Working Papers 12/007, African Governance and Development Institute..
  29. Asongu Simplice, 2011. "Law, Democracy and the Quality of Government in Africa," Working Papers 11/018, African Governance and Development Institute..
  30. 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.
  31. Simplice A, Asongu, 2012. "The impact of health worker migration on development dynamics: evidence of wealth-effects from Africa," MPRA Paper 38189, University Library of Munich, Germany.
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