We thank Patrick Guillaumont and Philippe Dulbecco for their guidance, and the participants of the CSAE 2011 anniversary conference in Oxford for their helpful comments and suggestions.
Does Aid Unpredictability Weaken Governance? Evidence from Developing Countries
Article first published online: 26 MAY 2013
© 2013 The Author. The Developing Economies © 2013 Institute of Developing Economies
The Developing Economies
Volume 51, Issue 2, pages 121–144, June 2013
How to Cite
Kangoye, T. (2013), Does Aid Unpredictability Weaken Governance? Evidence from Developing Countries. The Developing Economies, 51: 121–144. doi: 10.1111/deve.12008
- Issue published online: 26 MAY 2013
- Article first published online: 26 MAY 2013
- Manuscript Accepted: NOV 2012
- Manuscript Received: MAY 2011
- Rent seeking;
- Foreign aid;
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.