Corruption, aid volatility & growth

Jay Kathavate ()
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Jay Kathavate: University of Western Sydney

Economics Bulletin, 2013, vol. 33, issue 2, 1159-1169

Abstract: This paper revisits the debate on foreign aid effectiveness from a different perspective by analysing the role of institutional corruption on the effect of aid volatility on the output of developing nations. A simple political economy model is developed to show the effect of corruption on rent-seeking activities of incumbent legislators and their subsequent effect on country output. This phenomenon is empirically tested using data on 77 aid-receiving countries from the span of 1984 to 2007 using GMM to control for potential endogeneity.

Keywords: Aid Volatility; Corruption; Political Economy; Growth (search for similar items in EconPapers)
JEL-codes: F3 O4 (search for similar items in EconPapers)
Date: 2013-05-12
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