Arbeitspapier
Foreign Aid and Governance in Africa
Purpose This paper investigates the effect of foreign aid on governance in order to extend the debates on foreign aid and to verify common positions from Moyo's 'Dead Aid', Collier's 'Bottom Billion' and Eubank's 'Somaliland'. The empirical evidence is based on updated data from 52 African countries for the period 1996-2010. Design/methodology/approach An endogeneity robust instrumental variable Two-Stage-Least Squares empirical strategy is employed. Findings The findings reveal that development assistance deteriorates economic (regulation quality and government effectiveness) and institutional (corruption-control and rule of law) governance, but has an insignificant effect on political (political stability, voice and accountability) governance. While, these findings are broadly in accordance with Moyo (2009) and Collier (2007) on weak governance, they neither confirm the Eubank (2012) position on political governance nor the Asongu (2012) stance on the aid-corruption nexus in his debate with Okada & Samreth (2012). Practical implications The use of foreign aid as an instrument to influence the election and replacement of political leaders in Africa may have insignificant results. It is time to solve the second tragedy of foreign aid and that economists and policy makers start rethinking the models and theories on which foreign aid is used to influence economic, institutional and political governance in recipient countries. Originality/value The paper extends the debate on foreign aid and institutions in Africa in the light a plethora of recent studies in the aid literature.
- Language
-
Englisch
- Bibliographic citation
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Series: AGDI Working Paper ; No. WP/14/034
- Classification
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Wirtschaft
History of Economic Thought since 1925: General
Foreign Aid
International Relations, National Security, and International Political Economy: General
Economic Development: General
Economywide Country Studies: Africa
- Subject
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Foreign Aid
Political Economy
Development
Africa
- Event
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Geistige Schöpfung
- (who)
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Asongu, Simplice A.
Nwachukwu, Jacinta C.
- Event
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Veröffentlichung
- (who)
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African Governance and Development Institute (AGDI)
- (where)
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Yaoundé
- (when)
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2014
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Asongu, Simplice A.
- Nwachukwu, Jacinta C.
- African Governance and Development Institute (AGDI)
Time of origin
- 2014
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On the effect of foreign aid on corruption
On the dynamic effects of foreign aid on corruption
On the effectiveness of foreign aid in institutional quality
Reinventing foreign aid for inclusive and sustainable development: a survey
On taxation, political accountability and foreign aid: empirics to a celebrated literature