Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis

Good governance -- in the form of institutions that establish predictable, impartial, and consistently enforced rules for investors -- is crucial for the sustained and rapid growth of per capita incomes in poor countries. Aid dependence can undermi...

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Main Author:	Knack, Stephen
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ADMINISTRATIVE CAPACITY AID DEPENDENCE AID FLOWS BINDING CONSTRAINT BUDGETARY SUPPORT BUREAUCRACY BUREAUCRATIC EFFICIENCY BUREAUCRATIC QUALITY CITIZEN CITIZEN PARTICIPATION CIVIL SERVICE CIVIL SOCIETY COMMUNIST COMPETITION POLICY CORRUPT PRACTICES CORRUPTION CORRUPTION IN GOVERNMENT CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY DATA COUNTRY RISK GUIDE CURRENT ACCOUNT DEMOCRACY DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES DEVELOPMENT RESEARCH ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EXCHANGE OF IDEAS EXPENDITURE EXPORTS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FISCAL FOOD AID FOREIGN AID FOREIGN ASSISTANCE FOREIGN DEBT FREE PRESS GAPS GOOD GOVERNANCE GOVERNANCE INDEX GOVERNANCE INDICATORS GOVERNANCE VARIABLES GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT OFFICIALS GOVERNMENT RESOURCES GOVERNMENT REVENUES GOVERNMENT SPENDING GOVERNMENTAL ACCOUNTABILITY GROWTH REGRESSION IMPORTS INCIDENCE OF CORRUPTION INCOME INCOME GROWTH INCOME LEVELS INFANT MORTALITY INSTITUTIONAL CAPACITY INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL DEVELOPMENT INVESTMENT CLIMATE JUDICIAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LOBBYING LOCAL GOVERNMENTS LOCAL INSTITUTIONS NATIONAL INCOME NATIONS NATURAL RESOURCES PARASTATALS PARLIAMENT PER CAPITA INCOME PER CAPITA INCOMES POLICY IMPLICATIONS POLICY RESEARCH POLITICAL CONFLICT POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL RISKS PROPERTY RIGHTS PUBLIC EMPLOYEES PUBLIC FUNDS PUBLIC OFFICIALS PUBLIC SECTOR PUBLIC SECTOR ACCOUNTABILITY PUBLIC SECTORS PUBLIC SPENDING PUBLIC-SECTOR PUBLIC-SECTOR EMPLOYMENT QUALITY OF GOVERNANCE REVERSE CAUSALITY REVOLUTION RULE OF LAW SOCIAL CAPITAL SOCIAL GROUPS STATE-OWNED ENTERPRISES TARGETING TAX COLLECTIONS TAX REDUCTION TAX REVENUES TECHNICAL ASSISTANCE TRANSPARENT PROCEDURES WORLD DEVELOPMENT INDICATORS
Online Access:	http://documents.worldbank.org/curated/en/2000/07/443625/aid-dependence-quality-governance-cross-country-empirical-analysis http://hdl.handle.net/10986/19826

id	okr-10986-19826
recordtype	oai_dc
spelling	okr-10986-198262021-04-23T14:03:46Z Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis Knack, Stephen ADMINISTRATIVE CAPACITY AID DEPENDENCE AID FLOWS BINDING CONSTRAINT BUDGETARY SUPPORT BUREAUCRACY BUREAUCRATIC EFFICIENCY BUREAUCRATIC QUALITY CITIZEN CITIZEN PARTICIPATION CIVIL SERVICE CIVIL SOCIETY COMMUNIST COMPETITION POLICY CORRUPT PRACTICES CORRUPTION CORRUPTION IN GOVERNMENT CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY DATA COUNTRY RISK GUIDE CURRENT ACCOUNT DEMOCRACY DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES DEVELOPMENT RESEARCH ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EXCHANGE OF IDEAS EXPENDITURE EXPORTS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FISCAL FOOD AID FOREIGN AID FOREIGN ASSISTANCE FOREIGN DEBT FREE PRESS GAPS GOOD GOVERNANCE GOVERNANCE INDEX GOVERNANCE INDICATORS GOVERNANCE VARIABLES GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT OFFICIALS GOVERNMENT RESOURCES GOVERNMENT REVENUES GOVERNMENT SPENDING GOVERNMENTAL ACCOUNTABILITY GROWTH REGRESSION IMPORTS INCIDENCE OF CORRUPTION INCOME INCOME GROWTH INCOME LEVELS INFANT MORTALITY INSTITUTIONAL CAPACITY INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL DEVELOPMENT INVESTMENT CLIMATE JUDICIAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LOBBYING LOCAL GOVERNMENTS LOCAL INSTITUTIONS NATIONAL INCOME NATIONS NATURAL RESOURCES PARASTATALS PARLIAMENT PER CAPITA INCOME PER CAPITA INCOMES POLICY IMPLICATIONS POLICY RESEARCH POLITICAL CONFLICT POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL RISKS PROPERTY RIGHTS PUBLIC EMPLOYEES PUBLIC FUNDS PUBLIC OFFICIALS PUBLIC SECTOR PUBLIC SECTOR ACCOUNTABILITY PUBLIC SECTORS PUBLIC SPENDING PUBLIC-SECTOR PUBLIC-SECTOR EMPLOYMENT QUALITY OF GOVERNANCE REVERSE CAUSALITY REVOLUTION RULE OF LAW SOCIAL CAPITAL SOCIAL GROUPS STATE-OWNED ENTERPRISES TARGETING TAX COLLECTIONS TAX REDUCTION TAX REVENUES TECHNICAL ASSISTANCE TRANSPARENT PROCEDURES WORLD DEVELOPMENT INDICATORS Good governance -- in the form of institutions that establish predictable, impartial, and consistently enforced rules for investors -- is crucial for the sustained and rapid growth of per capita incomes in poor countries. Aid dependence can undermine institutional quality by weakening accountability, encouraging rent seeking and corruption, fomenting conflict over control of aid funds, siphoning off scarce talent from the bureaucracy, and alleviating pressures to reform inefficient policies and institutions. The author's analyses of cross-country data provide evidence that higher aid levels erode the quality of governance, as measured by indexes of bureaucratic quality, corruption, and the rule of law. This negative relationship strengthens when instruments for aid are used to correct for potential reverse causality. It is robust to changes in the sample and to several alternative forms of estimation. Recent studies have concluded that aid's impact on economic growth and infant mortality is conditional on policy and institutional gaps. The author's results indicate that the size of the institutional gap itself increases with aid levels. 2014-08-28T18:07:15Z 2014-08-28T18:07:15Z 2000-07 http://documents.worldbank.org/curated/en/2000/07/443625/aid-dependence-quality-governance-cross-country-empirical-analysis http://hdl.handle.net/10986/19826 English en_US Policy Research Working Paper;No. 2396 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADMINISTRATIVE CAPACITY AID DEPENDENCE AID FLOWS BINDING CONSTRAINT BUDGETARY SUPPORT BUREAUCRACY BUREAUCRATIC EFFICIENCY BUREAUCRATIC QUALITY CITIZEN CITIZEN PARTICIPATION CIVIL SERVICE CIVIL SOCIETY COMMUNIST COMPETITION POLICY CORRUPT PRACTICES CORRUPTION CORRUPTION IN GOVERNMENT CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY DATA COUNTRY RISK GUIDE CURRENT ACCOUNT DEMOCRACY DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES DEVELOPMENT RESEARCH ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EXCHANGE OF IDEAS EXPENDITURE EXPORTS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FISCAL FOOD AID FOREIGN AID FOREIGN ASSISTANCE FOREIGN DEBT FREE PRESS GAPS GOOD GOVERNANCE GOVERNANCE INDEX GOVERNANCE INDICATORS GOVERNANCE VARIABLES GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT OFFICIALS GOVERNMENT RESOURCES GOVERNMENT REVENUES GOVERNMENT SPENDING GOVERNMENTAL ACCOUNTABILITY GROWTH REGRESSION IMPORTS INCIDENCE OF CORRUPTION INCOME INCOME GROWTH INCOME LEVELS INFANT MORTALITY INSTITUTIONAL CAPACITY INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL DEVELOPMENT INVESTMENT CLIMATE JUDICIAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LOBBYING LOCAL GOVERNMENTS LOCAL INSTITUTIONS NATIONAL INCOME NATIONS NATURAL RESOURCES PARASTATALS PARLIAMENT PER CAPITA INCOME PER CAPITA INCOMES POLICY IMPLICATIONS POLICY RESEARCH POLITICAL CONFLICT POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL RISKS PROPERTY RIGHTS PUBLIC EMPLOYEES PUBLIC FUNDS PUBLIC OFFICIALS PUBLIC SECTOR PUBLIC SECTOR ACCOUNTABILITY PUBLIC SECTORS PUBLIC SPENDING PUBLIC-SECTOR PUBLIC-SECTOR EMPLOYMENT QUALITY OF GOVERNANCE REVERSE CAUSALITY REVOLUTION RULE OF LAW SOCIAL CAPITAL SOCIAL GROUPS STATE-OWNED ENTERPRISES TARGETING TAX COLLECTIONS TAX REDUCTION TAX REVENUES TECHNICAL ASSISTANCE TRANSPARENT PROCEDURES WORLD DEVELOPMENT INDICATORS
spellingShingle	ADMINISTRATIVE CAPACITY AID DEPENDENCE AID FLOWS BINDING CONSTRAINT BUDGETARY SUPPORT BUREAUCRACY BUREAUCRATIC EFFICIENCY BUREAUCRATIC QUALITY CITIZEN CITIZEN PARTICIPATION CIVIL SERVICE CIVIL SOCIETY COMMUNIST COMPETITION POLICY CORRUPT PRACTICES CORRUPTION CORRUPTION IN GOVERNMENT CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY DATA COUNTRY RISK GUIDE CURRENT ACCOUNT DEMOCRACY DEVELOPMENT ASSISTANCE DEVELOPMENT ISSUES DEVELOPMENT RESEARCH ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EXCHANGE OF IDEAS EXPENDITURE EXPORTS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FISCAL FOOD AID FOREIGN AID FOREIGN ASSISTANCE FOREIGN DEBT FREE PRESS GAPS GOOD GOVERNANCE GOVERNANCE INDEX GOVERNANCE INDICATORS GOVERNANCE VARIABLES GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT OFFICIALS GOVERNMENT RESOURCES GOVERNMENT REVENUES GOVERNMENT SPENDING GOVERNMENTAL ACCOUNTABILITY GROWTH REGRESSION IMPORTS INCIDENCE OF CORRUPTION INCOME INCOME GROWTH INCOME LEVELS INFANT MORTALITY INSTITUTIONAL CAPACITY INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL DEVELOPMENT INVESTMENT CLIMATE JUDICIAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LOBBYING LOCAL GOVERNMENTS LOCAL INSTITUTIONS NATIONAL INCOME NATIONS NATURAL RESOURCES PARASTATALS PARLIAMENT PER CAPITA INCOME PER CAPITA INCOMES POLICY IMPLICATIONS POLICY RESEARCH POLITICAL CONFLICT POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL RISKS PROPERTY RIGHTS PUBLIC EMPLOYEES PUBLIC FUNDS PUBLIC OFFICIALS PUBLIC SECTOR PUBLIC SECTOR ACCOUNTABILITY PUBLIC SECTORS PUBLIC SPENDING PUBLIC-SECTOR PUBLIC-SECTOR EMPLOYMENT QUALITY OF GOVERNANCE REVERSE CAUSALITY REVOLUTION RULE OF LAW SOCIAL CAPITAL SOCIAL GROUPS STATE-OWNED ENTERPRISES TARGETING TAX COLLECTIONS TAX REDUCTION TAX REVENUES TECHNICAL ASSISTANCE TRANSPARENT PROCEDURES WORLD DEVELOPMENT INDICATORS Knack, Stephen Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
relation	Policy Research Working Paper;No. 2396
description	Good governance -- in the form of institutions that establish predictable, impartial, and consistently enforced rules for investors -- is crucial for the sustained and rapid growth of per capita incomes in poor countries. Aid dependence can undermine institutional quality by weakening accountability, encouraging rent seeking and corruption, fomenting conflict over control of aid funds, siphoning off scarce talent from the bureaucracy, and alleviating pressures to reform inefficient policies and institutions. The author's analyses of cross-country data provide evidence that higher aid levels erode the quality of governance, as measured by indexes of bureaucratic quality, corruption, and the rule of law. This negative relationship strengthens when instruments for aid are used to correct for potential reverse causality. It is robust to changes in the sample and to several alternative forms of estimation. Recent studies have concluded that aid's impact on economic growth and infant mortality is conditional on policy and institutional gaps. The author's results indicate that the size of the institutional gap itself increases with aid levels.
format	Publications & Research :: Policy Research Working Paper
author	Knack, Stephen
author_facet	Knack, Stephen
author_sort	Knack, Stephen
title	Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
title_short	Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
title_full	Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
title_fullStr	Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
title_full_unstemmed	Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis
title_sort	aid dependence and the quality of governance : a cross-country empirical analysis
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2000/07/443625/aid-dependence-quality-governance-cross-country-empirical-analysis http://hdl.handle.net/10986/19826
_version_	1764441502676680704

Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis

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