On the Channels of Foreign Aid to Corruption

Abstract

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Is the Threat of Foreign Aid Withdrawal an Effective Deterrent to Political Oppression? Evidence from 53 African Countries

“…Hence, the study improves on the Beijing Model and Washington Consensus debate in a twofold manner: (1) the Moyo's (2013) conjecture on political versus economic rights and (2) the hypothesis that at the advent of globalization, poor countries are more concerned with economic rights in comparison to political rights (Lalountas et al, 2011;Asongu, 2014a). Third, debates on the aid-institutions nexus, amongst others: the aidcorruption relationship (Okada & Samreth, 2012;Asongu & Jellal, 2013;Asongu, 2012aAsongu, , 2013a, verification of the celebrated Eubank (2012) 3 literature (Asongu, 2015) and usage of the Eubank conjecture to extend some findings in the aid-governance literature (Kangoye, 2013versus Asongu, 2014b.…”

“…First, the Okada & Samreth (2012) and Asongu (2012aAsongu ( , 2013a) discussion on the 'effect of foreign aid on corruption' has been reconciled by Asongu & Jellal (2013) In clarifying Kangoye (2013), Asongu (2014b) has further used the Eubank conjecture.…”

“…In line with the discourse, since poverty in African countries is substantially traceable to institutional bad quality, developed countries have to promote credible institutions in the continent (Knack, 2001;Dixit, 2004;Amavilah, 1998;Alesina & Dollar, 2000;Alesina & Weder, 2002;Armah & Carl, 2008;Asongu, 2012aAsongu, , 2013aJellal & Bouzahzah, 2012;Asongu & Jellal, 2013;Djankov et al, 2008). As highlighted in the first paragraph above, foreign aid volatility may be used by donor countries for this purpose.…”

On the Effect of State Fragility on Corruption

“…Government expenditure should increase corruption (Asongu & Jellal, 2013, p. 2196Baliamoune-Lutz & Ndikumana, 2008). Trade openness decreases corruption (Asongu, 2014;Asongu, 2012Asongu, , p. 2178.…”

“…Trade openness decreases corruption (Asongu, 2014;Asongu, 2012Asongu, , p. 2178. Economic prosperity increases corruption (Asongu & Jellal, 2013, p. 2196Asongu, 2013a, p. 63), decreases corruption-control (Asongu, 2013b, p. 44 ) and per capital economic prosperity also increases corruption (Asongu, 2013c, p. 16). From intuition, low inflation should be favorable to corruption-control while high inflation should not; essentially because in situations of soaring food prices, many citizens revert to corrupt means to make ends meet.…”