Institutional benchmarking of foreign aid effectiveness in Africa

Simplice Asongu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper integrates two main strands of the aid-development nexus in providing additional information as to why institutional benchmarks (thresholds) matter for the effectiveness of aid in institutional development. Using seven government-quality dynamics (rule of law, regulation quality, government-effectiveness, political-stability, voice & accountability, corruption-control and democracy), we provide a thorough assessment of the aid-development nexus when existing institutional development levels matter. Results which are consistent across specifications and conditional distributions of institutional variables have three broad implications (with respect to three tested hypotheses). (1) Institutional benefits of foreign-aid are contingent on existing institutional levels in Africa. (2) But for a thin exception, foreign-aid is instrumental in institutional development for countries with low levels of institutional quality. (3) Institutional quality benefits of development assistance are questionable in countries with high levels of institutional development. As a policy implication, blanket policies based on the aid-development nexus are unlikely to be appropriate; therefore policy measures should be contingent on prevailing levels of institutional development and tailored differently across best and worst countries in terms of institutional development.

Keywords: Foreign Aid; Political Economy; Development; Africa (search for similar items in EconPapers)
JEL-codes: B20 F35 F50 O10 O55 (search for similar items in EconPapers)
Date: 2012-04-13
New Economics Papers: this item is included in nep-afr and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Institutional benchmarking of foreign aid effectiveness in Africa (2015)
Working Paper: Institutional benchmarking of foreign aid effectiveness in Africa (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38095

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