On the Dynamic Effects of Foreign Aid on Corruption
European Economics Letttes, 4(1), pp. 5-10 (June 2015).
14 Pages Posted: 31 May 2015 Last revised: 3 Jun 2015
Date Written: January 15, 2015
We assemble more pieces on the puzzle of the aid-corruption nexus. In essence, we extend the debate on the effect of foreign aid on corruption by providing evidence on dynamic effects of wealth, legal origin, religious-domination, regional proximity, openness to sea, natural resources and politico-economic stability. The empirical evidence from dynamic panel GMM estimation is based on 53 African countries for the period 1996-2010. The findings show that the positive effect of foreign aid on corruption is most significant in: Middle-income, French civil-law, Christian-dominated, non-oil exporting and landlocked countries. Moreover, there is also some scanty evidence of foreign aid increasing corruption-control in Lower Middle income and Not-landlocked countries. Justifications for the dynamics are discussed.
Keywords: Foreign Aid; Political Economy; Development; Africa
JEL Classification: B20; F35; F50; O10; O55
Suggested Citation: Suggested Citation