The Reality About Aid and Governance: The Threshold Theory

Saïd Jaouadi

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International Development and Aid Corruption and Economic Development Natural Resources and Economic Development

Abstract

The aim of this survey is to explain the real impact of aid on governance in the developing countries: including the subsahara and the MENA region during the period 1990-2004 by using the “threshold theory”. Stephen Knack proved that foreign aid had a harmful impact on the governance of the developing countries. But, in this study we used a new econometric approach to test the existence of a threshold and to determine its value. This methodology allowed us to find interesting results in the relation between aid and governance, in the short and in the long run.

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References

1995INSTITUTIONS AND ECONOMIC PERFORMANCE: CROSS‐COUNTRY TESTS USING ALTERNATIVE INSTITUTIONAL MEASURES 2000Sample Splitting and Threshold Estimation 2004Foreign Aid, Institutions, and Governance in Sub‐Saharan Africa 2000Aid effectiveness disputed 2001Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests 1998A Panel Data Analysis of the Fungibility of Foreign Aid 2001On Aid, Growth and Good Policies 2004Development Effectiveness: What have We Learnt?

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