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Development Aid, Corruption, and the Happiness of Nations: Analysis of 118 countries over the years 1996-2009

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  • B. Mak ARVIN
  • Byron LEW

Abstract

Several studies emphasize the importance of the general environment in recipient countries for effectiveness of development aid. Another more recent strand of the literature considers whether the receipt of aid affects the happiness of developing countries. Since corruption, an indicator of the general environment, coexists with aid we consider an empirical model where both are arguments of a happiness production function. We present evidence on the relationship between happiness and aid given different levels of corruption. We find that accounting for corruption, aid has a negative marginal effect on happiness – but only in countries where corruption is most rampant.

Suggested Citation

  • B. Mak ARVIN & Byron LEW, 2012. "Development Aid, Corruption, and the Happiness of Nations: Analysis of 118 countries over the years 1996-2009," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
    • Handle: RePEc:eaa:aeinde:v:12:y:2012:i:2_5
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    References listed on IDEAS

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    6. B. Arvin & Byron Lew, 2009. "Happiness and Foreign Aid," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(3), pages 325-326, September.
    7. B. Mak Arvin & Byron Lew, 2011. "Are foreign aid and migrant remittances sources of happiness in recipient countries?," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 7(4/5/6), pages 282-300.
    8. Arvind K. Jain, 2001. "Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
    9. Bruno S. Frey, 2008. "Happiness: A Revolution in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062771, April.
    10. Carol Graham, 2011. "Adaptation amidst Prosperity and Adversity: Insights from Happiness Studies from around the World," The World Bank Research Observer, World Bank, vol. 26(1), pages 105-137, February.
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    Citations

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    Cited by:

    1. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Is the Threat of Foreign Aid Withdrawal an Effective Deterrent to Political Oppression? Evidence from 53 African Countries," Research Africa Network Working Papers 16/020, Research Africa Network (RAN).
    2. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "Not all that glitters is gold: ICT and inclusive human development in Sub-Saharan Africa," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 3(4), pages 303-322.
    3. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    4. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    5. MAGAZZINO, Cosimo & LEOGRANDE, Angelo, 2021. "Subjective Well-Being In Italian Regions: A Panel Data Approach," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 21(1), pages 1-18.
    6. Simplice A. Asongu & Joseph I. Uduji & Elda N. Okolo-Obasi, 2020. "Foreign aid volatility and lifelong learning," International Journal of Education Economics and Development, Inderscience Enterprises Ltd, vol. 11(4), pages 370-406.
    7. Lu, Juan & Li, He, 2023. "The impact of environmental corruption on green consumption: A quantitative analysis based on China's Judicial Document Network and Baidu Index," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    8. Asongu Simplice, 2014. "The Evolving Debate on the Effect of Foreign Aid on Corruption and Institutions in Africa," Working Papers of the African Governance and Development Institute. 14/009, African Governance and Development Institute..
    9. Simplice Asongu, 2014. "A brief clarification to the questionable economics of foreign aid for inclusive human development," Working Papers of the African Governance and Development Institute. 14/028, African Governance and Development Institute..
    10. Borlea Sorin Nicolae & Achim Monica Violeta & Rus Alexandra Ioana Daniela, 2019. "Behavioral Determinants of Corruption. A Cross-Country Survey," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(1), pages 21-39, March.
    11. Monica Violeta Achim & Viorela Ligia Văidean & Sorin Nicolae Borlea, 2020. "Corruption and health outcomes within an economic and cultural framework," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(2), pages 195-207, March.
    12. Mueller, Valerie & Billings, Lucy & Mogues, Tewodaj & Peterman, Amber & Wineman, Ayala, 2015. "Filling the legal void? Experimental evidence from a community-based legal aid program for gender-equal land rights in Tanzania:," IFPRI discussion papers 1434, International Food Policy Research Institute (IFPRI).
    13. Renz, Timon, 2021. "Development policy based on happiness? A review of concepts, ideas and pitfalls," FZG Discussion Papers 75, University of Freiburg, Research Center for Generational Contracts (FZG).

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    More about this item

    Keywords

    Happiness; Corruption; Foreign aid flows; Developing countries;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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