Does aid unpredictability weaken governance? Evidence from developing countries

Thierry Kangoye
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Thierry Kangoye: BAD - BANQUE AFRICAINE DE DEVELOPPEMENT - BAD

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Abstract: This paper examines the effects of aid on governance from a different perspective by asserting that aid unpredictability can potentially increase corruption in recipient countries by providing incentives to risk-averse and corrupt political leaders to engage in rent-seeking activities. Analyses of data from 80 developing countries over the period 1984-2004 offer evidence that higher aid unpredictability is associated with more corruption as measured by a synthetic index. We also find further evidence that this latter impact is more severe in countries with weak initial institutional conditions. These findings are a supplementary advocacy for the need for better management and better predictability of aid flow in developing countries.

Keywords: cerdi (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (98)

Published in The Developing Economies, 2013, 51 (2), pp.121-144

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00843755

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