Does Aid Dependence Worsen Governance?

Ear, Sophal

doi:10.1080/10967490701515580

Cited by 54 publications

(37 citation statements)

References 28 publications

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“…9;2015 Heckelman andKnack (2005) used data on governance quality from the Economic Freedom and found that aid dependence weakens market-liberalizing reforms. Knack and Rahman (2007) Foreign aid can however also lead to better governance, especially if aid is linked to improved governance and provides technical support towards good governance and generally by aiding in human development of the recipient countries (Ear, 2007). Goldsmith (2001) found that higher aid/GDP ratio is associated with higher levels of democratic performance and economic freedom in sub-Saharan Africa.…”

Section: Wwwccsenetorg/ibrmentioning

confidence: 99%

“…8, No. 9;2015 scale are associated with establishment of effective institutions (Knack, 2001;Brä utigam & Knack, 2004;Ear, 2007). Economic development can generate tax revenues for public coffers, which can improve the quality of governance by alleviating funding constraints (Goldsmith, 2001;Knack, 2001;Brä utigam & Knack, 2004;Dunning, 2004;Ear, 2007).…”

Section: Quality Of Governance It = α + β 1 Foreign Aid It + β 2 Edmentioning

confidence: 99%

“…On the other side of the debate, several studies have argued that foreign aid affects the quality of governance positively (Goldsmith, 2001;Dunning, 2004;Ear, 2007;Charron, 2011;Okada & Samreth, 2012). These studies contend that aid can improve the quality of civil administration, boost policy and planning capacity, and strengthen central institutions.…”

Section: Introductionmentioning

confidence: 99%

“…Following Knack (2001) and Ear (2007), a composite measure of the quality of governance was computed by taking a simple average of the six indicators. Therefore, a total of seven versions of equation (1) were estimated with each of the six indicators as well as the composite indicator of governance as the dependent variable.…”

Section: Quality Of Governance It = α + β 1 Foreign Aid It + β 2 Edmentioning

confidence: 99%

“…Good governance can thus help make the country a more attractive destination for foreign direct investment. encouraging corruption and other rent seeking activities, fueling conflict between competing interest groups over access to aid funds, and diverting human resources from the public sector to aid-funded projects (Tavares, 2003;Brä utigam & Knack, 2004;Ear, 2007;Asongu, 2013). The World Bank admits that the huge increase in foreign aid packages to developing countries has inadvertently contributed to the "opportunities of malfeasance" (World Bank, 1989, p. 27).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Foreign Aid and Quality of Governance in Developing Countries: An Econometric Case Study of South Asia and East Asia

Quazi¹,

Alam²

2015

IBR

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The paper investigates the effect of foreign aid on governance. Foreign aid's effect on the quality of governance remains a widely debated topic. Theory provides conflicting guidance on this and the empirical record of previous research is not conclusive and often contradictory. Our research on a sample of South Asian and East Asian countries suggests that aid can have a positive effect on governance when controlling for other country factors. The estimated results also suggest that multilateral aid has a positive effect on the quality of governance, but the effect of bilateral aid on the quality of governance is either negative or insignificant. These results have important policy implications for donor countries and multilateral institutions alike.

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Section: Wwwccsenetorg/ibrmentioning

confidence: 99%

Section: Quality Of Governance It = α + β 1 Foreign Aid It + β 2 Edmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Quality Of Governance It = α + β 1 Foreign Aid It + β 2 Edmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Foreign Aid and Quality of Governance in Developing Countries: An Econometric Case Study of South Asia and East Asia

Quazi¹,

Alam²

2015

IBR

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A Framework for Understanding Aid Effectiveness Determinants, Strategies and Tradeoffs

Howes

2013

Asia & Pacific Policy Stud

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Corruption, foreign aid, and international trade

Bahoo

Alon

Floreani

2022

Thunderbird Intl Bus Rev

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Corruption has varying effects on international trade flows. Through the lenses of the institutional and transaction costs theories, we propose a novel institutional analysis of foreign aid as a formal institution that moderates the negative impact of corruption on international trade. We investigate this framework using a sample of the imports and exports of 30 Organization for Economic Co‐operation and Development (OECD) member countries and their 150 trading partners from 1995 to 2018. We analyze two main types of bilateral foreign aid within this framework: official development assistance and aid for trade. We present three main findings. First, the trading partners' corruption has a negative impact on OECD bilateral imports and exports. Second, both forms of foreign aid moderate the negative effect of the trading partners' corruption on OECD countries' exports. These findings confirm that OECD member countries are willing to export to very corrupt countries. Third, official development assistance does not moderate the relationship between corruption and imports, meaning that OECD countries do not import from corrupt locations. However, aid for trade still moderates the negative impact of corruption on OCED countries' imports. Overall, we confirm that foreign aid negatively moderates the adverse effect of corruption on exports but not on imports. Thus, foreign aid as a formal institution deserves more attention from OECD policymakers and managers of MNEs as a mechanism for reducing corruption and boosting international trade.

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Does Aid Dependence Worsen Governance?

Cited by 54 publications

References 28 publications

Foreign Aid and Quality of Governance in Developing Countries: An Econometric Case Study of South Asia and East Asia

Foreign Aid and Quality of Governance in Developing Countries: An Econometric Case Study of South Asia and East Asia

A Framework for Understanding Aid Effectiveness Determinants, Strategies and Tradeoffs

Corruption, foreign aid, and international trade

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