Development Aid, Corruption, and the Happiness of Nations: Analysis of 118 countries over the years 1996-2009

Mak Arvin and Byron Lew

Applied Econometrics and International Development, 2012, vol. 12, issue 2

Abstract: Several studies emphasize the importance of the general environment in recipient countries for effectiveness of development aid. Another more recent strand of the literature considers whether the receipt of aid affects the happiness of developing countries. Since corruption, an indicator of the general environment, coexists with aid we consider an empirical model where both are arguments of a happiness production function. We present evidence on the relationship between happiness and aid given different levels of corruption. We find that accounting for corruption, aid has a negative marginal effect on happiness – but only in countries where corruption is most rampant.

Keywords: Happiness; Corruption; Foreign aid flows; Developing countries (search for similar items in EconPapers)
JEL-codes: D73 F35 I31 O11 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (24)

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