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Institutional benchmarking of foreign aid effectiveness in Africa

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  • Simplice A, Asongu

Abstract

This paper integrates two main strands of the aid-development nexus in providing additional information as to why institutional benchmarks (thresholds) matter for the effectiveness of aid in institutional development. Using seven government-quality dynamics (rule of law, regulation quality, government-effectiveness, political-stability, voice & accountability, corruption-control and democracy), we provide a thorough assessment of the aid-development nexus when existing institutional development levels matter. Results which are consistent across specifications and conditional distributions of institutional variables have three broad implications (with respect to three tested hypotheses). (1) Institutional benefits of foreign-aid are contingent on existing institutional levels in Africa. (2) But for a thin exception, foreign-aid is instrumental in institutional development for countries with low levels of institutional quality. (3) Institutional quality benefits of development assistance are questionable in countries with high levels of institutional development. As a policy implication, blanket policies based on the aid-development nexus are unlikely to be appropriate; therefore policy measures should be contingent on prevailing levels of institutional development and tailored differently across best and worst countries in terms of institutional development.

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  • Simplice A, Asongu, 2012. "Institutional benchmarking of foreign aid effectiveness in Africa," MPRA Paper 38095, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38095
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    2. Simplice A. Asongu & Mohamed Jellal, 2014. "Foreign aid, investment and fiscal policy behavior: theory and empirical evidence," Research Africa Network Working Papers 14/030, Research Africa Network (RAN).
    3. Asongu, Simplice A & Nwachukwu, Jacinta C., 2015. "Foreign aid instability and bundled governance dynamics in Africa," MPRA Paper 71783, University Library of Munich, Germany.
    4. Simplice A. Asongu & Jacinta C. Nwachukwu, 2015. "Foreign aid volatility and lifelong learning: demand-side empirics to a textual literature," Research Africa Network Working Papers 15/016, Research Africa Network (RAN).
    5. Asongu, Simplice & Nnanna, Joseph, 2019. "Foreign aid, instability and governance in Africa," MPRA Paper 101087, University Library of Munich, Germany.
    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. Maonei Mangwanya, 2022. "Evaluating the impacts of foreign aid on low-income countries in Sub-Saharan Africa," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 370-377, September.
    8. Oasis Kodila-Tedika & Asongu Simplice, 2016. "State fragility, rent seeking and lobbying: evidence from African data," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(10), pages 1016-1030, October.
    9. 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..
    10. Dijkstra, Geske, 2018. "Aid and good governance: Examining aggregate unintended effects of aid," Evaluation and Program Planning, Elsevier, vol. 68(C), pages 225-232.
    11. Simplice A. Asongu & Vanessa S. Tchamyou, 2019. "Foreign Aid, Education and Lifelong Learning in Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 126-146, March.

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    More about this item

    Keywords

    Foreign Aid; Political Economy; Development; Africa;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General

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