EXPLORING THE IMPACT OF FOREIGN AID ON CORRUPTION: HAS THE “ANTI-CORRUPTION MOVEMENT” BEEN EFFECTIVE?
Article first published online: 21 FEB 2011
© 2011 The Author. The Developing Economies © 2011 Institute of Developing Economies
The Developing Economies
Volume 49, Issue 1, pages 66–88, March 2011
How to Cite
CHARRON, N. (2011), EXPLORING THE IMPACT OF FOREIGN AID ON CORRUPTION: HAS THE “ANTI-CORRUPTION MOVEMENT” BEEN EFFECTIVE?. The Developing Economies, 49: 66–88. doi: 10.1111/j.1746-1049.2010.00122.x
- Issue published online: 21 FEB 2011
- Article first published online: 21 FEB 2011
- First version received 2009; final version accepted July 2010
- Foreign aid;
- Multilateral ODA;
- Bilateral ODA;
- International organizations
Though many studies have referred to an “anti-corruption movement” beginning in the 1990s by major international organizations, none has empirically tested its effectiveness on corruption. The data show that from 1997 onward, the impact of multilateral aid is strongly and robustly associated with lower corruption levels, while bilateral aid is shown to be an insignificant determinant. An increase in any official development assistance (ODA) pre-1997 is associated with higher levels of corruption or has no impact at all. Using panel data from 1986 to 2006, this study reveals a more nuanced relationship between ODA and corruption than previous studies and demonstrates that when disaggregating the time periods, there are sensitive temporal effects of ODA's effect on corruption overlooked by earlier studies, and provides initial evidence of the effectiveness of the international organization anti-corruption movement in the developing world.