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

摘要: Do higher levels of aid erode the very quality governance poor countries need for sustained and rapid income growth? Good - in form institutions that establish predictable, impartial, consistently enforced rules investors is crucial growth per capita incomes countries. Aid dependence can undermine institutional by weakening accountability, encouraging rent seeking corruption, fomenting conflict over control funds, siphoning off scarce talent from bureaucracy, alleviating pressures to reform inefficient policies institutions. Knack's analyses cross-country data provide evidence governance, as measured indexes bureaucratic quality, rule law. This negative relationship strengthens when instruments are used correct potential reverse causality. It robust changes sample several alternative forms estimation. Recent studies have concluded aid's impact on economic infant mortality conditional policy gaps. results indicate size gap itself increases with levels. paper a product Regulation Competition Policy, Development Research Group part larger effort group identify determinants good conducive long-run development. The author may be contacted at sknack@worldbank.org.