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Exploring the Impact of Foreign Aid on Corruption – Has the ‘Anti-Corruption’ Movement Been Effective?

Journal article
Authors Nicholas Charron
Published in Developing Economies
Volume 49
Issue 1
Pages 66-88
ISSN 0012-1533
Publication year 2011
Published at Quality of Government Institute (QoG)
Department of Political Science
Pages 66-88
Language en
Links dx.doi.org/10.1111/j.1746-1049.2010...
Keywords Corruption, Foreign Aid, Development, Multilateral ODA, Bilateral ODA, International Organizations
Subject categories Econometrics, Peace and development research

Abstract

: Though many studies have referred to an ‘anti-corruption movement’ beginning in the 1990’s by major international organizations, none has empirically tested its effectiveness on corruption. The data show that from 1997 on, 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 ODA pre-1997 is associated with higher levels of corruption or has no impact at all. Using panel data from 1986-2006, this study reveals a more nuanced relationship between ODA and corruption than in 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 (IO), anti-corruption movement in the developing world.

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