Handbook on the Economics of Foreign Aid
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Handbook on the Economics of Foreign Aid

Edited by B. Mak Arvin and Byron Lew

It would be fair to say that foreign aid today is one of the most important factors in international relations and in the national economy of many countries – as well as one of the most researched fields in economics. Although much has been written on the subject of foreign aid, this book contributes by taking stock of knowledge in the field, with chapters summarizing long-standing debates as well as the latest advances. Several contributions provide new analytical insights or empirical evidence on different aspects of aid. As a whole, the book demonstrate how researchers have dealt with increasingly complex issues over time – both theoretical and empirical – on the allocation, impact, and efficacy of aid, with aid policies placed at the center of the discussion.
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Chapter 19: The evolving debate of the effect of foreign aid on corruption and institutions in Africa

Simplice A. Asongu

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The subject of foreign aid remains widely debated in academic and policy-making circles. There has been a recent stream of studies raising doubts about the mechanisms by which foreign aid is governed (Banuri, 2013; Ghosh, 2013; Krause, 2013; Marglin, 2013; Monni and Spaventa, 2013; Titumir and Kamal, 2013; Wamboye et al., 2013). Some accounts in the narrative present a picture of foreign aid being governed by neo-colonialism (Amin, 2014). This stance is shared, on the one hand, by Ndlovu-Gatsheni (2013) on the entrapment of Africa within colonial power webs and, on the other hand, by Kindiki (2011) on the need for the continent to strategically reduce its dependence on systems or regimes of international aid. This chorus has been joined by Obeng-Odoom (2013) who has articulated that foreign aid policies have to be holistic processes that clearly define the needs of poor countries. This articulation converges with the stance of Amin (2014) who has equally emphasized that models of development should not be restricted to what donors wish was good for poor economies. The above new and evolving stream substantially supports recently celebrated literatures on foreign aid, notably, The Bottom Billion (Collier, 2007), Dead Aid (Moyo, 2009) and the Somaliland hypothesis (Eubank, 2012). These literatures have a common denominator of suggesting a rethinking of foreign aid policies and mechanisms.

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