Foreign Aid and Corruption: Clarifying Murky Empirical Conclusions

Efobi, Uchenna; Beecroft, Ibukun; Asongu, Simplice

doi:10.2139/ssrn.2538304

Foreign Aid and Corruption: Clarifying Murky Empirical Conclusions

Foreign Trade Review, 54(3), pp. 253-263 (September, 2019)

A G D I Working Paper WP/14/025

9 Pages Posted: 15 Dec 2014 Last revised: 25 Aug 2019

See all articles by Uchenna Efobi

Simplice Asongu

African Governance and Development Institute

Date Written: December 15, 2014

Abstract

This note reconciles an on-going debate on the effect of foreign aid on corruption by introducing a previously missing heterogeneity dimension of aid. The relationship was estimated using dynamic system GMM and quantile regressions (QR). Results show that both narratives in the debate are correct, contingent on the type of development assistance. The QR results are robust to endogeneity when the independent variables of interest are instrumented with their first-lags.

Keywords: Foreign Aid; Political Economy; Development; Africa

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

Suggested Citation: Suggested Citation

Efobi, Uchenna and Beecroft, Ibukun and Asongu, Simplice, Foreign Aid and Corruption: Clarifying Murky Empirical Conclusions (December 15, 2014). A G D I Working Paper WP/14/025. Available at SSRN: https://ssrn.com/abstract=2538304 or http://dx.doi.org/10.2139/ssrn.2538304