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Foreign Aid and Corruption: Anti-Corruption Strategies Need Greater Alignment with the Objective of Aid Effectiveness

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  • Quibria, M.G.

Abstract

The history of foreign aid has been inextricably linked with corruption. Since the inception of International Development Association(IDA) in 1960, with its concessional lending to developing countries, a large body of writings has emerged on the corrosive effect of corruption that undermines the effectiveness of foreign aid. In view of the pervasiveness of corruption, the international development community has taken a firm stance against it. This essay begins with a brief discussion of the definition, type, and measurement of corruption. This is followed by a review of various anti-corruption measures implemented by donors and recipient countries to combat corruption. The final section ends with some concluding remarks. It also appears that the recent intensified campaign against corruption has reached a point of diminishing returns in terms of its impact on aid effectiveness. It argues that combating corruption is not an end in itself; it is a means to an end (i.e., attaining aid effectiveness). The current strategy of combating corruption emphasizes on implementing new procedures, establishing new departments, and strengthening prosecution; it has no direct bearing on the results foreign aid seeks to achieve—such as inclusive growth, service delivery, and sustainability. The strategy of combating corruption should, therefore, be subsumed under the strategy of aid effectiveness for maximum development impact

Suggested Citation

  • Quibria, M.G., 2017. "Foreign Aid and Corruption: Anti-Corruption Strategies Need Greater Alignment with the Objective of Aid Effectiveness," MPRA Paper 85722, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85722
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    References listed on IDEAS

    as
    1. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
    2. International Monetary Fund, 2016. "Corruption: Costs and Mitigating Strategies," IMF Staff Discussion Notes 2016/005, International Monetary Fund.
    3. International Monetary Fund, 2016. "Corruption; Costs and Mitigating Strategies," IMF Staff Discussion Notes 16/05, International Monetary Fund.
    4. M.G. Quibria, 2006. "Does Governance Matter? Yes, No or Maybe: Some Evidence from Developing Asia," Kyklos, Wiley Blackwell, vol. 59(1), pages 99-114, February.
    5. Bardhan, Pranab, 2006. "The economist's approach to the problem of corruption," World Development, Elsevier, vol. 34(2), pages 341-348, February.
    6. Quibria, M.G., 2014. "Aid effectiveness: research, policy and unresolved issues," MPRA Paper 86215, University Library of Munich, Germany, revised 2014.
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    More about this item

    Keywords

    aid effectiveness; corruption; policies;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F35 - International Economics - - International Finance - - - Foreign Aid

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