Waylaid Dialectic

June 30, 2010

Aid and Corruption

Filed under: Aid,Governance — terence @ 5:01 pm
Tags: , ,

“Power corrupts”, a commenter on Duncan Green’s blog wrote, “PowerPoint corrupts absolutely.”

Yes, well, we all know about PowerPoint, but what about aid? It’s taken as axiomatic by people such as Dambasa Moyo and Helen Hughes that aid creates corruption. But one of the many troubles with Moyo and Hughes’ work is that so much is taken axiomatic, and so little is argued on the basis of actual evidence.

Speaking of evidence, while one working paper certainly isn’t the final word, the findings of Nicholas Charron’s paper, Exploring the Impact of Foreign Aid on Corruption: Has the ‘Anti-Corruption’ Aid been Effective?, make for interesting reading.

The 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.

This would certainly correspond with the belief of many in the aid world that the aid game changed somewhat around the turn of the millennium, with less aid being given for overtly political reasons and a much greater emphasis being placed on aid quality.

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