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The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that, since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59% on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A 1 percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points.

There is little systematic evidence on the links between procurement systems and outcomes such as competition and corruption levels. This paper adds to the evidence, using data on 34,000 firms from the World Bank’s Enterprise Surveys, in 90 countries with procurement systems data from Public Expenditure and Financial Accountability (PEFA) assessments. We find that in countries with better public access to complete, reliable, and timely procurement information, firms are more likely to participate in public procurement markets. Firms report paying less in kickbacks to officials in countries where exceptions to open competition in tendering must be explicitly justified, and where there are effective and independent complaints mechanisms. These findings—particularly on kickbacks—are robust to the inclusion of numerous controls and to a range of sensitivity tests. However, due to data limitations we are unable to rule out the possibility that these estimates may reflect in part endogeneity bias.

This study analyzes the impact of various forms of \"social capital\" on governmental performance in the American states. Aspects of social capital that are conceptually identified with generalized reciprocity (such as social trust, volunteering, and census response) are associated with better governmental performance, as measured by ratings constructed by the Government Performance Project. In contrast, aspects of social capital identified with social connectedness (including activity in associations and informal socializing) are unrelated to governmental performance, These findings call into question the use of heterogeneous indexes of social capital that mix social connectedness indicators together with indicators of generalized trust and reciprocity.

Aid potentially can contribute to democratization in several ways: (1) through technical assistance focusing on electoral processes, the strengthening of legislatures and judiciaries as checks on executive power, and the promotion of civil society organizations, including a free press; (2) through conditionality; and (3) by improving education and increasing per capita incomes, which research shows are conducive to democratization. This study provides a multivariate analysis of the impact of aid on democratization in a large sample of recipient nations over the 1975-2000 period. Using two different democracy indexes and two different measures of aid intensity, no evidence is found that aid promotes democracy. This result is robust to alternative model specifications and estimation techniques, including the use of exogenous instruments for aid. Results are similar if the analysis is confined to the post-Cold War period (1990-2000), despite the reduced dependence of the U.S. and other donors on pro-Western authoritarian regimes among aid recipient nations.

The determinants of public opinion on foreign aid in donor countries have received little attention. This paper examines support for foreign aid with a large, multi-level, cross-national study. Hypotheses are tested with multi-level models, including both individual-level and country-level variables, to predict positive attitudes. Two dataseis are used to measure attitudes in donor countries: (1) the 1995 World Values Survey, which has information from approximately 6,000 individuals in nine countries and asks a rich battery of questions at the individual level; (2) the 2002 Gallup Voice of the People survey, asks fewer questions of individuals but contains 17 donor countries. Using both surveys combines their distinct strengths and allows tests of individual-and national-level theories across disparate samples. Results generally support the predictions that attitudes toward aid are influenced by religiosity, beliefs about the causes of poverty, awareness of international affairs, and trust in people and institutions. Les déterminants de l'opinion publique dans les pays donateurs à propos de l'aide étrangère ont reçu peu d'attention. Cet article examine le soutien à l'aide étrangère en s'appuyant sur une vaste étude transnationale multi niveau. Les hypothèses sont évaluées avec des modèles multi niveaux incluant des variables tant de niveau individuel que par pays pour pronostiquer les attitudes positives. Deux ensembles de données sont utilisés pour mesurer les attitudes dans les pays donateurs : 1/1'Enquête de valeurs mondiale 1995 offre des informations pour environ 6 000 individus dans neuf pays et présente une riche batterie de questions au niveau individuel; 2/1'enquête Gallup 2002 \"la Voix des Gens\" pose moins de questions individuelles mais comprend dix-sept pays donateurs. L'utilisation des deux enquêtes combine leurs forces distinctes et permet de tester les théories aux niveaux individuel et national à travers des échantillons contrastés. Les résultats confirment généralement le postulat que les attitudes en faveur de l'aide dépendent de la religiosité, de croyances à propos des causes de pauvreté, d'une connaissance des affaires internationales, de la confiance dans les gens et les institutions. Los factores determinantes de la opinión pública en países donantes sobre la ayuda al exterior es un tema aún poco estudiado. Este artículo explora el apoyo a la ayuda al exterior en un gran estudio comparativo transnacional y multinivel. La prueba de hipótesis se realiza con modelos multinivel que incluyen tanto variables individuales como variables a nivel de país, y que conjeturan actitudes positivas. Para medir las actitudes en países donantes, el estudio utiliza dos bases de datos: (1 ) La Encuesta Mundial de Valores de 1995 contiene información proporcionada por 6,000 individuos aproximadamente, en nueve países diferentes, e incluye una valiosa serie de preguntas a nivel individual, (2) La encuesta Gallup de 2002 \"La Voz de la Gente\" contiene menos preguntas que la anterior, pero incluye a diecisiete países donantes. El uso combinado de estas dos encuestas, cada una con sus respectivos puntos fuertes, permite la puesta a prueba de teorías individuales y nacionales con muestras dispares. En general, los resultados confirman la predicción según la cual en las actitudes hacia la ayuda exterior influyen la religiosidad, las creencias sobre las causas de la pobreza, el grado de concienciación sobre asuntos internacionales, y la confianza en personas e instituciones.

We show that public investment is dramatically higher in countries with low-quality governance and limited political checks and balances or no competitive elections. This result is robust to a number of specifications. The most plausible interpretation of these results is that these governments use public investment as a vehicle to increase their rent-seeking. This evidence suggests that efforts to increase public investment in countries with weak governance, or to measure the growth effects of productive public investment using only observed measures of public investment, should be undertaken with caution.

Concern about corruption has stimulated the creation of a multiplicity of indicators by a multiplicity of methods by the World Bank, World Economic Forum, Transparency International and commercial rating agencies. However, the construction of indices varies, raising substantive and methodological issues, which are reviewed with particular reference to post-Communist transition societies in Eastern Europe and Central Asia. This paper systematically examines indicators, starting with the definitional distinction between measures of administrative corruption as distinct from state capture. It pays particular attention to problems arising from the aggregation of indicators from multiple sources, and the extent to which the changing composition of cross-country indicators limits trend analysis. It concludes that many of the problems of aggregation may be avoided by using single source and single dimension indexes.

More than a decade ago, the World Bank argued that \"underlying the litany of Africa's development problems is a crisis of governance.\" Poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterize many African states today. Aid levels have been reduced in many parts of Africa during the past decade. Yet in many of the countries with poor governance records, aid continues to contribute a very high percentage of government budgets. This article explores the institutional impact of these high levels of aid and the way that large amounts of aid are delivered. The study finds evidence that higher aid levels are associated with larger declines in the quality of governance, as measured by subjective indicators. It also finds higher aid associated with lower tax effort in Africa. The conclusion offers some recommendations for reducing the possible deleterious impact of aid.

Received wisdom argues that citizens more readily demand accountability from government for taxes than for nontax revenue from oil or foreign aid, giving rise to an important mechanism underlying the “resource curse,” which posits that nontax revenue causes citizen quiescence and hampers government accountability. However, in developing countries, obfuscation through value-added taxes and strong popular feelings of ownership over all revenues may minimize differences across revenue sources. Identical experiments on representative samples of Ghanaians and Ugandans, and similar experiments on members of parliament, probe the effects of different sources and delivery channels of government revenues on citizens’ actions to monitor governments and members of parliament (MPs’) beliefs about accountability pressures. Roughly half of all citizens take action to monitor all 3 sources. However, neither Ghanaians nor Ugandans demand more accountability for taxes than oil or aid when the revenues go to the government. MPs likewise saw no difference. Citizens do differentiate between aid money given to nongovernmental organizations (NGOs) compared with revenues delivered to the government. Findings are robust to numerous alternatives and subgroups. Against strong expectations from prior research, little evidence exists showing that taxes strengthen citizens’ demands for accountability or that MPs perceive differences across revenue sources in these 2 representative African countries. However, aid channeled through NGOs motivates more accountability pressures.

Why does trust vary so substantially across countries? This paper presents a general equilibrium growth model in which heterogeneous agents transact and face a moral hazard problem. Agents may trust those with whom they transact, but they also have the opportunity to invest resources in verifying the truthfulness of claims made by transactors. We characterise the social, economic and institutional environments in which trust will be high, and show that low trust environments reduce the rate of investment. The predictions of the model are examined empirically for a cross-section of countries and have substantial support in the data.