Does aid unpredictability weaken governance? Evidence from developing countries

Abstract : This paper examines the effects of aid on governance from a different perspective by asserting that aid unpredictability can potentially increase corruption in recipient countries by providing incentives to risk-averse and corrupt political leaders to engage in rent-seeking activities. Analyses of data from 80 developing countries over the period 1984-2004 offer evidence that higher aid unpredictability is associated with more corruption as measured by a synthetic index. We also find further evidence that this latter impact is more severe in countries with weak initial institutional conditions. These findings are a supplementary advocacy for the need for better management and better predictability of aid flow in developing countries.
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Contributor : Cerdi Etudes & Documents - Publications <>
Submitted on : Friday, July 12, 2013 - 9:53:05 AM
Last modification on : Thursday, January 11, 2018 - 6:17:18 AM

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Thierry Kangoye. Does aid unpredictability weaken governance? Evidence from developing countries. The Developing Economies, 2013, 51 (2), pp.121-144. ⟨halshs-00843756⟩

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