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On foreign aid distortions to governance

Simplice Asongu ()

No 14/003, Working Papers from African Governance and Development Institute.

Abstract: The Kangoye (2013, TDE) findings on the negative nexus between foreign aid unpredictability and governance could seriously affect debates in academic and policy making circles. Using the theoretical underpinnings of the celebrated Eubank (2012, JDS) literature, we first confirm Kangoye’s findings. Then extend the concept of governance from corruption to political, economic, institutional and general versions of the phenomenon. Findings from the extension run counter to those of Kangoye. It follows that in the presence of foreign aid uncertainty, governments could be constrained to improve governance standards in exchange for or anticipation of more dependence on local tax revenues. The empirical evidence is based on 53 African countries for the period 1996-2010. Two direct policy implications result. First, the Kangoye findings for developing countries are relevant for Africa. Second, when the concept of governance is not restricted to corruption, the findings become irrelevant for the continent.

Keywords: Uncertainty; Foreign aid; Governance; Development; Africa (search for similar items in EconPapers)
JEL-codes: C53 F35 F47 O11 O55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr
Date: 2014-01
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http://www.afridev.org/RePEc/agd/agd-wpaper/On-For ... ns-to-governance.pdf Revised version, 2013 (application/pdf)

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Working Paper: On foreign aid distortions to governance (2014) Downloads
Working Paper: On foreign aid distortions to governance (2014) Downloads
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