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Sorting out the aid–corruption nexus

Published online by Cambridge University Press:  03 August 2021

Jamie Bologna Pavlik  and
Andrew T. Young
Jamie Bologna Pavlik*
Affiliation:
Agricultural and Applied Economics, Texas Tech University, Lubbock, TX 79409, USA
Andrew T. Young
Affiliation:
Rawls College of Business, Texas Tech University, Lubbock, TX 79409, USA
*
*Corresponding author. Email: jamie.bologna@ttu.edu
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Abstract

We employ matching methods to explore the relationships between foreign aid flows and corruption in recipient countries. Data are drawn from recipients of foreign aid for the 1996–2013 period. We find no compelling evidence of an effect running from corruption to aid flows. Furthermore, point estimates imply that corruption reforms lead countries to receive less aid. Alternatively, we generally find that, over a 10-year horizon, a sustained increase in aid leads to more corruption in a recipient. It is the sustained nature of an aid increase that seems to be important for this effect. (We generally do not report significant results for large changes in aid that are not sustained over time.)

Keywords

Corruptioneconomic developmentforeign aidinstitutional qualitymatching methodsODAofficial development assistanceD73F35O1O19
Type
Research Article
Information
Journal of Institutional Economics , Volume 18 , Issue 4 , August 2022 , pp. 637 - 653
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

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