Foreign aid, instability and governance in Africa

Simplice Asongu and Joseph Nnanna ()
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Joseph Nnanna: The Development Bank of Nigeria, Abuja, Nigeria

No 19/022, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: This study contributes to the attendant literature by bundling governance dynamics and focusing on foreign aid instability instead of foreign aid. We assess the role of foreign aid instability on governance dynamics in fifty three African countries for the period 1996-2010. An autoregressive endogeneity-robust Generalized Method of Moments is employed. Instabilities are measured in terms of variance of the errors and standard deviations. Three main aid indicators are used, namely: total aid, aid from multilateral donors and bilateral aid. Principal Component Analysis is used to bundle governance indicators, namely: political governance (voice & accountability and political stability/no violence), economic governance (regulation quality and government effectiveness), institutional governance (rule of law and corruption-control) and general governance (political, economic and institutional governance). Our findings show that foreign aid instability increases governance standards, especially political and general governance. Policy implications are discussed.

Keywords: Instability; Foreign aid; Governance; Development; Africa (search for similar items in EconPapers)
JEL-codes: C53 F35 F47 O11 O55 (search for similar items in EconPapers)
Pages: 35
Date: 2019-01
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Citations: View citations in EconPapers (21)

Forthcoming: Politics & Policy

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http://www.afridev.org/RePEc/agd/agd-wpaper/Foreig ... rnance-in-Africa.pdf Revised version, 2019 (application/pdf)

Related works:
Working Paper: Foreign aid, instability and governance in Africa (2019)
Working Paper: Foreign aid, instability and governance in Africa (2019)
Working Paper: Foreign aid, instability and governance in Africa (2019)
Working Paper: Foreign aid, instability and governance in Africa (2019)
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