International Aid, Corruption and Fiscal Policy Behavior

African Governance and Development Institute WP/14/007

38 Pages Posted: 10 Sep 2014

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Mohamed Jellal

Al Makrizi Institute of Economy

Date Written: June 8, 2014

Abstract

The Okada & Samreth (2012, EL) and Asongu (2012, EB; 2013, EEL) debate on ‘the effect of foreign aid on corruption’ has had an important influence in policy and academic circles. This paper provides a unifying framework by using investment and fiscal behavior transmission channels in 53 African countries for the period 1996-2010. Findings unite the two streams of the debate and broadly suggest that while the ‘government’s final consumption expenditure’ channel is consistent with the latter author, the investment and tax effort channels are in line with the former authors. Justifications for the nexuses are provided. Policy implications on how to use foreign aid constraints in managing fiscal behavior as means of reducing (increasing) corruption (corruption-control) are discussed.

Keywords: Foreign Aid; Political Economy; Development; Africa

JEL Classification: B20; F35; F50; O10; O55

Suggested Citation

Asongu, Simplice and Jellal, Mohamed, International Aid, Corruption and Fiscal Policy Behavior (June 8, 2014). African Governance and Development Institute WP/14/007. Available at SSRN: https://ssrn.com/abstract=2493442 or http://dx.doi.org/10.2139/ssrn.2493442

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Mohamed Jellal

Al Makrizi Institute of Economy ( email )

Rabat
Morocco

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