An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa

Center for Global Development Working Paper No. 74

Mario Einaudi Center for International Studies Working Paper No. 11-05

28 Pages Posted: 3 Dec 2005

See all articles by Todd J. Moss

Todd J. Moss

Center for Global Development

Gunilla Pettersson Gelander

Birk Consulting

Nicolas van de Walle

Cornell University; Center for Global Development

Date Written: January 2006

Abstract

A number of proposals today support a substantial increase in foreign aid levels to sub-Saharan Africa even though this region already receives a historically unprecedented volume of aid. This essay reviews the evidence regarding the potentially negative effects of aid dependence on state institutions, a topic which has received relatively little attention. We note several pathways through which political institutions might be adversely affected and devote particular attention to fiscal and state revenue issues. In addition to reviewing the economic literature on the aid-revenue relationship, this essay brings in the longstanding political science literature on state-building to consider the potential impact of aid dependence on the relationship between state and citizen. We conclude that states which can raise a substantial proportion of their revenues from the international community are less accountable to their citizens and under less pressure to maintain popular legitimacy. They are therefore less likely to have the incentives to cultivate and invest in effective public institutions. As a result, substantial increases in aid inflows over a sustained period could have a harmful effect on institutional development in sub-Saharan Africa.

Keywords: Institutions, Aid, State-Building, Sub-Saharan Africa

JEL Classification: O10, P16, H20

Suggested Citation

Moss, Todd J. and Pettersson Gelander, Gunilla and van de Walle, Nicolas, An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa (January 2006). Center for Global Development Working Paper No. 74; Mario Einaudi Center for International Studies Working Paper No. 11-05. Available at SSRN: https://ssrn.com/abstract=860826 or http://dx.doi.org/10.2139/ssrn.860826

Todd J. Moss (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

HOME PAGE: http://www.cgdev.org

Gunilla Pettersson Gelander

Birk Consulting ( email )

Varberg
Sweden

Nicolas Van de Walle

Cornell University ( email )

Ithaca, NY 14853
United States

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

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