Does Foreign Aid Influence Corruption? New Evidence in East Africa Community Member Countries

Suleiman Malik Faki and Prof. Fuzhong Chen
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Suleiman Malik Faki: School of International Trade and Economics, University of International Business and Economics, China
Prof. Fuzhong Chen: School of International Trade and Economics, University of International Business and Economics, China.

International Journal of Science and Business, 2021, vol. 5, issue 4, 46-58

Abstract: The key objective in this paper is to examine the foreign aid impact on corruption in East Africa Community Member countries. The paper employed Pooled Ordinary Least Square (Pooled OLS), Random Effect (RE) and Fixed Effect (FE) approach to find out the external aid effects on corruption. The study used panel data covering from the year from 1996 to 2017 for 5 EAC member nations. The study findings revealed that foreign aid flow has reduced impact on the level of corruption in EAC nations. Based on the findings which found that aid flows reduce the level of corruption in EAC member countries, it is suggested that cooperation between donor countries should be strengthen when allocate aid and through attaching conditions among other things which help to improve governance and institutional framework. In addition, the allocation of aid to the poor countries should be based on selective approach in such way that major conditions for a nation to meet the requirements for aid should be institutional quality reforms.

Keywords: Aid; Corruption; Governance; Development; Developing countries (search for similar items in EconPapers)
Date: 2021
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