The Impact of Corruption on Official Development Aid
Working to Improve the Economies of Developing
Countries: A Three Country Case Study
Mia Elizabeth Horvath S-2594447 Master’s Thesis
Faculty of Global and Governance Affairs
MSc Public Administration - International & European Governance Leiden University
The Hague, The Netherlands March 10th, 2021 Supervisor: Dr. K. Suzuki
Table of Contents
1. INTRODUCTION……… Pg. 3
2. LITERATURE REVIEW & THEORETICAL DISCUSSION……….…………Pg. 6
3. RESEARCH DESIGN & DATA ANALYSIS……….………Pg. 15 3.1 Research Design……….Pg. 15
Case Selection Strategy……….Pg. 15 Data Collection Strategy: Defining and Developing the Variables…..…Pg. 19 3.2 Data Analysis……….Pg. 23 Measuring Development Assistance..……….Pg. 23 Measuring Corruption………..…Pg. 26 Measuring Economic Conditions……….………Pg. 30 3.3 Case Studies: Understanding Aid, Corruption & Development……….Pg. 33
Case Study A: Algeria………..……Pg. 34 Case Study B: Sudan ………Pg. 38 Case Study C: Uganda ……….Pg. 43
4. RESULTS & CONCLUSION……….………Pg. 49 Understanding the Findings……….………..….…..…Pg. 49 Policy Implications………Pg. 54 Argument Strength……….Pg. 56
Future Study………..………Pg. 57
1. Introduction
For several decades, western societies have been living in a perpetual “aid culture”, which allows the creation of institutions dedicated to economic and social improvements in developing nations. In 2018 alone, a record was broken for the most Official Development Aid ever given worldwide at over $165 billion (World Bank, 2020). The normal practice is to commit millions of dollars from national budgets to be allocated to such causes. For decades, participation in foreign aid schemes and institutions such as United States Agency for International Development (USAID), The World Bank, and International Monetary Fund (IMF) among many others have been in place to loan money or offer assistance to countries in need. This has become an integral part of governance in the western world. However, there are growing numbers of researchers and experts in the fields from economics and international relations who suggest that this causes more harm than help as corruption within countries seems to impede aid effectiveness (Easterly, 2003; Mukjerhee, 2008; Moyo, 2009). This brings us to the following research question:
How does corruption impact the effectiveness of Official Development Aid in improving the economic fitness of developing countries?
Developed nations, through various channels and methods, give billions of dollars in assistance to developing countries. In Le Journal International, Lyons describes the ineffectiveness of foreign aid as exasperated by the underlying corruption in developing nation recipients (2014). “The continent as a whole receives roughly $50 billion of international assistance annually…this aid makes the rich richer, the poor poorer and hinders economic growth in the region, not to mention catalyzing the vicious cycle of
corruption,” (Lyons, 2014). Another consideration that can possibly speak about the ineffectiveness and possible harm of aid on the economy is the reality that, over the past decade, the continent of Asia, despite receiving very little aid and developmental
assistance in comparison to Africa, has experienced elevated levels of economic growth that has been unattainable by many of the aid-receiving countries in Africa (Lyon, 2014; Moyo, 2009). It is worth noting, in particular, that African countries despite receiving billions of dollars in aid and support, are now much worse off economically than they were in previous decades,. In the book, Dead Aid:Why Aid Is Not Working and How
There Is a Better Way for Africa, Goldman Sachs economist, Dambisa Moyo (2009)
reveals that over $1 trillion in total aid has been given to African countries since the 1940s. She also highlights that the literacy rate and childhood mortality rate, among other measures of development, are worse now than they were in the 1970s. Giving assistance to a country that desperately needs it and attempting help raise its population out of poverty are generally accepted as moral and just causes. However, one must consider that more and more money is given in economic aid every year. According to the experts in the field, there is a long running trend of many recipient countries requiring more aid each year (Moyo, 2009). This is why some experts consider aid efforts to be a dubious attempt to improve economic conditions, as over $300 billion of development aid has been administered in Africa alone, and yet, the economic conditions have largely not shown any improvements (Capps, 2005). Essentially, critics of the aid efforts are not convinced that these institutions are meeting their goals. With billions of dollars being pumped into the economies, it is legitimate to ask whether they have been helpful or have been hindering the improvement of economic conditions in developing countries.
Foreign aid effectiveness and how governance practices impact the economy are two widely studied topics. However, combining the two and linking one to the other can offer an insight that is understudied. It is understood that corruption is bad, and that it impacts a nation internally. However, it is not widely researched and therefore, it is largely unknown how the corruption of governance systems goes beyond borders as nations continue to fund these development programs that do not fulfill their missions. Furthermore, countries becoming reliant on development assistance defeats the purpose of the programs and is essentially a wasted investment for the donor countries if there are no long-term, substantial improvements (Easterly, 2003; Moyo, 2010; Williams, 2011). Improving the knowledge of the conditions in which aid is effective will positively impact aid utilization and its success. Thus, increasing awareness and understanding would conceivably lead to the overhaul of the current foreign aid scheme to properly combat the economic inefficiencies in developing countries. If it is understood that the quality of government is important to development, perhaps then the ODA can be modified to be given to countries where it will be most useful and systems can be put in place to ensure the ODA is being used properly in countries where it is more prone to be mishandled or less impactful. This research consists of a review of the relevant and related literature, a summary or profile of each country selected, a qualitative case study delving into each country over time as well as comparing three countries across different measures. These will be explained and operationalized in the research design section, followed by an analysis of the results or what can be derived from this research, and a section covering the contributions and limitations of the research, as well as
2. Literature Review & Theoretical Discussion
There is an impressive body of literature across several interesting topics such as foreign aid use and misuse, good governance practices for development, etc. However, in research, there is a noticeable absence of literature that seeks to combine the studying of development aid and whether it truly improves the economic conditions of the recipient countries. This research will explore two hypothesis, the first being:
H1: Foreign aid efforts (Official Development Assistance) are rendered ineffective with
the presence and element of corruption (Corruption Perception Index) in its goal of improving economic conditions (Economic Fitness) of recipient countries.
The hypothesis is derived from the growing understanding in the field that good governance practice is key to improving economic conditions; additionally, some say the same logic can and should be applied to the foreign aid schemes to improve its
effectiveness. H1 assumes the corruption is the intervening variable in this case, making it difficult for ODA efforts to be effective in improving economic development and overall conditions. The goal with this research is to see if that understanding in regards the relationship between corruption and aid is justifiable. While there is limited amount of research which specifically highlight corruption as a culprit to foreign aid ineffectiveness and economic hinderances, (see: Asongu & Mohammed, 2013; Asongu & Nnanna, 2019.), there is no limit to scholars who are quick to point out governance practices matters to economic development. This phenomenon is well-backed by scholarly research coming out over the last several decades regarding economic prosperity and good
governance practices. Scholars such as Eastery (2003), Moyo (2009), Lyons (2014) explore foreign aid and its failings; whereas other scholars such as, Williams (2011), Cornell (2014), Murkhjee (2008), Azam et. al. (2009), and Capps (2005), explore economic development in relation to governance systems and practices which are perceived as helping or hindering economic growth. The main objective is to provide a bridge connecting the increasing understanding of the connectedness between the two “worlds” of research to explain the hypothesis. Two particularly strong proponents of this are Dambisa Moyo, an economist who describes foreign aid efforts in Africa as largely harmful and ineffective in her previously mentioned 2009 book, Dead Aid: Why Aid Is
Not Working and How There Is a Better Way for Africa. Another is Simplice Asongu, the
lead economist from the African Governance and Development Institute, who produces extensive research regarding aid, governance, and corruption. DCorruption has been
explained, through various mechanisms and perspectives, as something that can greatly intervene with economic development. One perspective offered from research on Nigeria concludes that economic growth and development has been negatively impacted by corruption (Nageri, Umar & Abdul, 2013). Namely, the study comes to the conclusion, “ that corruption has seriously affected the polity of Nigeria and it is seriously affecting the potential growth ability of the country to the extent that over $100Billion in GDP is lost,”(Nageri, Umar & Abdul, 2013. p. 54). The different mechanisms of corruption in Nigeria according to this study include things, “such as bribery, fraudulent acts, embezzlement of public and private funds and property, election rigging and ballot stuffing, money laundering,”(Nageri, Umar & Abdul, 2013. p. 54). Corruption in this manner has caused issues with public infrastructures, it has increased poverty, and ultimately, “it shows that no matter the efforts of government to improve the economy
and the presence of other developmental indices, when corruption is not reduced to its bearable minimum, economic growth and development will be very difficult to sustain in Nigeria,”(Nageri, Umar & Abdul, 2013. p. 54). Another perspective can be found in Song et. al. (2021) study of the global evidence as it relates to economic growth and corruption. Song et. al. explores this topic through a large global study of 142 countries from 2002 to 2016 in which the goal is to uncover the effect if corruption on economic growth, as well as financial development. The authors in this case explain their are two camps among economists and scholars regarding this topic, and the perspectives on the matter are rather divided. Most of the literature, according to Song et. al., regards corruption as having a significant and negative correlation with economic development, and state that
economists are, “mainly concerned about the impact and mechanism of corruption on economic growth,”(2021, p. 822). However, it is important to acknowledge the sect of scholars and practitioners which take the perspective that corruption can actually lead to economic development in certain circumstances. Namely, Song et. al. explain that this faction understand, “corruption (as) increases(ing) the likelihood of beneficial
transactions that would otherwise not have happened. The mechanism is that the existence of corruption makes all kinds of government invalid behaviors corrected by individuals through illegal means, such as bribery, etc. In doing so, it increases
efficiency,”(2021, p. 822). The ultimate conclusion which can be drawn from the results of this study is that the relationship between corruption and economic and finical
development is not always so uniformly able to be understood in the context of developed versus developing countries. This is an important perspective to understand, however, countries which are receiving foreign development aid are likely to be categorized as developing countries.
An alternative explanation, or hypothesis, about the relationship between these three variables is H2: foreign aid or development assistance (ODA) contributes to the
increase corruptive behaviors within a recipient country which causes the continuity or worsening of poor economic conditions and performance.
With this argument, the understanding goes beyond the argument discussed in first hypothesis which merely states ODA cannot be effective in the presence of corruption. This hypothesis takes it a step further by describing ODA as the culprit in increasing corruption and lackluster economic conditions. Namely, H2 assumes that corruption exists as the normal state of being for a country in this case study and further that ODA is a contributory factor that leads to economic performance and conditions worsening. Some of the scholars whose work was used to form the first hypothesis, also believe in this idea, such as Loyns (2014) and Moyo (2009) who extensively covers the problems of aid dependency. It is possible that both of these hypothesis are, to some degree, supported or correct, even though they offering differing explanations for the same scenario. Notably, Asongu & Mohamed (2013), describe foreign aid being consumed by governments as actually increases corruption; they contend that aid is more likely to be positively used when channeled through private investment means. Furthermore, Asongu (2012) discusses the effect of foreign aid on corruption, concluding that corruption in African countries is often times fueled by development assistance.
Building from the understanding created and based on the conclusions one can derive from previous relevant literature, one can build a framework for understanding the
possible relationship between and the perceived impact of corruption on the effect of ODA in improving the economic conditions of recipient countries. One of the main widely accepted concepts that scholars who study foreign aid and development agree on is that without positive governance practices by the recipient country, much of the money given through foreign aid schemes are doomed to be largely ineffective (Abuzeid, 2009; Easterly, 2003; Moyo, 2009; Lyon, 2014). As the Easterly article explains, money from institutions or organizations that is not bound by economic reform, contracts, or
conditions is more likely to be wasted or misused (2003). The concept of aid
mismanagement suggests that non-directed money may more easily end up financing inappropriate consumption by the recipient government rather than its proper, intended use: financing investments to better the economy and conditions of the overall population (Easterly, 2003). When this happens, there is no meaningful or long term impact made by the foreign aid and the ineffectiveness of the recipient governments leads to no
improvement for the masses, or even makes the overall economic situation worse. Another consequence to be noted is aid dependence. Developing governments receiving economic development assistance in the form of large sums of unconditional or low-conditional money, do not possess any incentive to increase the economic production of the poor (Easterly, 2003). Abuzeid (2009) explains this further how an overflow in the amount of foreign aid possibly has negative impacts on the governments receiving
assistance, and ultimately causes more harm than it does good. She also defines ODA and its objectives. ODA is essentially the financing of developing states through either
bilateral or multilateral flows. Bilateral schemes are when the money goes from
developed countries directly to the recipient country, and multilateral schemes are when the money flows through a third party such as the World Bank, IMF, or Nongovernmental
Organization before reaching the recipient country. The general and simple objective of ODA is to “promote the economic development and general welfare” of LDCs (Abuzeid, 2009). According to Lyons (2014), foreign aid is thought to strengthen corruption where corruption already exists, and this idea of corruption and aid feeding off one another is widely reinforced by the previously mentioned studies (Asongu & Nwachukwu, 2016; Easterly, 2003; Fasanya & Onkoya, 2012). Furthermore, this is an issue because a majority of aid recipients in the world are often considered to be the most corrupt, and further they have other unimpressive scores in the area of quality governance. Here, one can see a clear connection between increased development aid funds and an increase in corruption and/or an increase in funds given to countries that are already highly corrupt as claims the second hypothesis of this study. Lyon deduces that, “foreign aid simply
reinforces the number of resources available to already corrupt specific elite groups of people, thus tipping or keeping the balance of power into the hands of the executive branch of government,”(2009, para. 6).
Additional relevant literature describes the adjacent topics that can be applied to development aid and the conditions for achieving economic growth. One interesting article covers the topic of benevolent governments, which are described as governments that have the appearance of openness and democratic ideas. However, unbeknownst to most, these are predatory governments that function by taking advantage of their citizens for the benefit of the upper classes. Namely, Azam et al. (2009) discusses overthrowing governments to solve the problems caused by predatory governments. However, the conclusion of this article contains an important discovery about development in general, which has may be relevant and may be applied to foreign aid effectiveness. Cornell (2014) similarly discusses how important bureaucratic stability is and why this is
important in the implementation of democratic governance programs. While not directly related to the discussion of foreign aid and its influence, the conclusion derived can help scholars, policy practitioners, administrators, and government officials in making
informed decisions on the processes of distributing development aid in a way that will be impactful for the donors and recipients across the board. This research seeks to provide contributions to the logic of existing arguments regarding governance systems and what matters when giving foreign aid assistance.
It is important to consider elements, such as political and civil stability, as scholars argue that development requires both economic growth and a change in political
expectation (Azam et al., 2009; Easterly, 2003; Williams, 2011). William’s book, The
World Bank and Social Transformation in International Politics: Liberalism, Governance and Sovereignty, describes what he considers to be a new and important position that has
been adopted and implemented by the World Bank over time (2011). The World Bank, according to Williams, has developed a problem-solving attitude towards the problem of poor governance practices and its link to the underdeveloped nature of companies in need of aid. Over the decades, the mission of the World Bank has evolved to include in its main set of activities, the overhaul, changes, and the improvement of governance in the states it serves. Overarching ideas expressed by Azam et al. (2009) and Mukjerhee (2008) about the importance of governance support Williams’ (2011) and the World Bank’s logic in striving for good governance to achieve development. According to Azam at al., “only liberal regimes that respect property rights and do not capriciously alter the rules of the game to their own advantage can achieve development” (2009, p. 272). This can perhaps explain why corrupt leaders of developing nations, who receive millions of dollars in development aid each year, benefit the continuity of a subpar economy, and therefore
continue to funnel funds away from appropriate developmental financial investments and instead use the money inappropriately. It is more possible for autocratic leaders rather than democratic leaders to do this because autocratic leaders do not rely on support from citizens to stay in power; they just need to appease the few people capable of seizing power from them if they were seen unfit to remain in power. This is why governance systems, practices, and the general status of political and civil stability within a state are key elements in understanding the successful implementation of development aid. This furthers the concept that aid success requires a successful existing system, (Asongu & Nwachukwu, 2016; Easterly, 2003; Fasanya & Onkoya, 2012; Williams, 2011). Explicitly, “donor governments should be aware of the political situations in recipient countries, and work with international bodies to ensure as much stability as
possible,”(Fasanya & Onkoya, 2012, p. 423). Asongnu & Nwachukwu (2016) and
Asongu & Nnanna (2019) provide further literature reinforcement to the idea that foreign aid, as it stands today, is not only not the proper solution, but it also causes some issues. This helps build the resounding and increasingly popular argument for foreign aid reform or the restructuring of foreign aid schemes to ensure increased effectiveness.
There is a plethora of literature and studies regarding the complex and dynamic topic of foreign aid, and its specific attempts to lift the African economy (See: Moyo, 2009; Fasanya & Onakoya, 2012; Asongu,& Nwachukwu, 2016). The Effect of Foreign
Aid on Economic Growth in Developing Countries by Ekanayake and Chatrna (2010)
explores this topic by studying 85 countries across the world from 1980–2007.This study further contributes to the idea mentioned above regarding political and civil stability. Namely that it is important to be aware of the internal issues within a recipient country, such as corruption or other political/governmental issues, to ensure the proper use of the
aidInterestingly enough, the hypothesis, in this case, is diametrically opposed to that of this research, which states that the authors of this study estimated that foreign aid would promote economic growth in developing countries. Though this was not wholly the case, Ekanayake and Chatrna (2010) conclude that foreign aid “has mixed effects on economic growth in developing countries”. Fasanya and Onakoya (2012) conducted similar
research which specifically studied the conditions of Nigeria and its economic growth fostered by the aid, during a time period, 1970–2010, similar to that of Ekanayake and Chatrna (2010). However, Fasanya and Onkoya (2012) found results differing from the larger study by Ekanayake and Chatrna, (2010). They found that Nigeria was actually experiencing economic growth from foreign aid, but the growth was not achieved solely due to foreign aid. In this case, it was “sound policy and good economic management (that) matter(d) more than foreign aid for Nigeria. As the record shows, without good institutions, aid is likely to have a detrimental impact on the quality of governance in a recipient developing country” (Fasanya & Onakoya 2012, p. 430).
The next chapter will cover research design and data analysis, explicitly developing the research through: case selection, data collection, the defining and developing of the variables, and finally the analysis and subsequent discussion of the three case studies.
3. Research Design and Data Analysis
3.1 Research Design
Defining and Developing the Variables
Case Selection Strategy
To explore the previously stated hypotheses, three countries will be studied: Uganda, Algeria, and Sudan - Both within-case analysis for each country will be
conducted, and elements of comparative analysis between the countries will be offered as well. The Encyclopedia of Case Study Research describes within-case analysis as a discussion of patterns and process which are revealed in regards to a singular case; “The focus can be on particular elements of the story that are revealed in the data, such as the context or the outcomes, or the processes that are revealed within the data, such as how decision making and sense-making occurs in regard to a particular phenomenon,” (Mills et. al., 2010, p. 971). These three country cases were intentionally picked to control variables such as location and population. By selecting countries similar in population size and similar geographical locations, these can be considered controlled variables, so not to cause bias or extraneous factors to impede on the testing of the hypotheses. Control variables are ones, “that researchers seek to keep constant when conducting research”, (Allen, 2018, p. 1843). Further, these three cases are ideal candidates for exploring the validity of both hypothesis one (H1) and hypothesis two (H2). More will be discussed about the purpose of each country in section 3.3.
Case Studies, particularly when utilized in the social sciences, have provided large contributions to theory development and increase the deeper understanding of problems and phenomenons, (Blatter & Haverland, 2012). The differing levels of development aid, economic fitness, and corruption scores, which will be further discussed below, allow H1
and H2 to be studied, as each hypothesis offers a different explanation to the research question at hand. In order for the case study to provide broader insight into the to the topic, the cases were not chosen at random, but with intentions of being representative. This is considered the typical case selection. Gerrig explains further that, “case selection for very small samples must employ purposive (nonrandom) selection procedures,” whereas larger samples can and should be randomized (2009, p. 1). The cases selected can be considered cover two types of case selection methods offered by Gerrig (2009): 1) Typical and 2) Diverse, leaving out the third method of Extreme case selection.
Figure 1 Source: Gerrig (2009) The Oxford Handbook of Political Methodology
According to the table above, the cases selected according to each of these styles come with certain pre-dispositions, however, this research seeks to create a hybrid, or middle ground approach between the two options. cases selected can serve as both typical
and diverse selections especially when it comes to the amount of aid received, as the amount is varied, but not on either extreme ends of the spectrum. There is also some level of variation with the other measures studies which will be introduced in section 3.2. The nature of having both typical and diverse cases can somewhat improve the scope of generalizability. Though these three countries receive different levels of aid and corruption scores while still remaining to be average or median recipients. This is an important condition because studying extremely high or low level recipient countries will result in the findings not be applicable to a large sum of other recipient nations, harming generalizability. By not choosing subjects in the “top” of the receiving countries, nor the lower end of recipients, but having them come from various levels across the median or average group of recipients, will tell more about average cases. is more impactful to study such normal or average recipients. This is because according to the 2019 Organization for Economic Co-operation and Development report on financing sustainable development, the top 10 recipient nations take only 1/4 of the total funds, with the other 122 recipients consuming 75% of the available money. The top 10 recipients, receiving a quarter of all development funds, in 2017 were: 1) Syrian Arab Republic, 2) Ethiopia, 3) Afghanistan, 4) Bangladesh, 5) Nigeria, 6) Yemen, 7) Turkey, 8) India, 9) Jordan, and 10) Iraq, (OCED, 2019). By studying country cases from this more typical range, analysis and conclusions may be developed which can then be applicable to improve aid delivery to a majority of the recipients, and 75% of the available funding, an important factor to
consider when trying to improve effectiveness of aid. Further, according to the same 2019 OECD report, the continent of Africa receives over one-third, or 34.9% of total official development assistance from 2010-2017. Therefore, it is imperative to understand the status of development assistance in Africa in particular. and to discern whether or not
these immense monetary efforts are making an significant difference and achieving the goals, or if these resources are being largely wasted and unsuccessful in achieving meaningful development.
It is pertinent to the case studies to outline the potential bias and limitations ahead of exploring the study more deeply. Firstly, there are some issues with data and sources from inside the case countries due to language barriers or general lack of availability, thus most of the data comes from third-party or international organizations rather than more local source. This is a large limitation as local sources could provide a clearer picture of corruption issues, as they are closer to the source of the problems. Secondly, this study consists of only three countries, though spread across various regions of Africa, there are parts of the continent which are not represented here. As well as there are regions in the world that utilize aid that are not represented in this study; OECD reports that 66% of the aid in allotted to countries outside of Africa, (2019). There are limitations to
acknowledge when selecting cases; limitations such as lack of generalizability, should be noted. Small-n case studies may have issues regarding scope, as the case selection cannot be random, but must be purposeful. Although, by intentional selecting measures in which there is a plethora of data availability for other states as well, generalizability is improved due to increased replicability. This parlays into the next item to be discussed: the data collection strategy,which seeks to explain how the data is collected and understood in order to answer the guiding research question.
Da
ta Collection Strategy: Defining and Developing the Variables
The research relies mainly on the analysis and comparison of various bodies of relevant data. Thus, collecting the data from reputable bodies, as well as confirming uniformity of data availability is of high importance to the data collection strategy. For example, data concerning the amount of development aid, which is of particular concern for this research, comes from the WorldBank data catalog in which all three countries have readily available data. Further, this research utilizes the Economic Fitness ranking scores from the WorldBank data catalog which will be described in more detail below. Finally, the last main research tool comes from Transparency International and their highly regarded Corruption Perception Index to measure corruption in this research. However, the collection of data regarding this topic is merely that of observation, and in order to be realized as evidence and ultimately conformation of the validity of the hypotheses will require the creation of inferential value, (Beach & Pederson, 2013). Observations need also the assurance of accuracy to be presented as evidence, (Beach & Pedersen, 2013). In this research particularly, observations are converted into evidence by assuring reputable sources are used in the data collection process, as well as sufficient contextual information solidifies the quantitative observations as legitimate evidence.
Besides this main data collection effort, the aim or strategy, is to further supplement and understand these figures by collecting additional sources to provide further evidence and clarity. Case studies are often considered qualitative research, however, Blatter & Haverland (2012) explain that combining combining quantitative and qualitative research means and methods has advantages. The main advantage they note refers to the strengthening and complementing of theories and the improvement of
validity in findings, (Blatter & Haverland, 2012). In order to utilize this idea, the case studies take a combinative approach to understanding and analyzing the data, and what it means in terms of the argumentative strength of the hypotheses in answering the research question. This refers specifically to the supplementation of other relevant quantitative data, or other findings through more qualitative means such as relevant news or scholarly articles concerning one or more of the elements within the case study country. Finding reliable new stories which discuss a corruption scandal in one of the three nations regarding the misuse of foreign aid that occurred within the years of the data collection, allows reasoning and justification of the scores and ranks assigned to the country by international bodies and organizations. Examples of this include the utilization of various news outlets such as: Middle Eastern Monitor, PBS News, The Guardian, and The North
Africa Journal just to name a few. Besides scholarly journals, additional sources are also
utilized to provide further information and contribute to the understanding of the topic such as: The Organized Crime and Corruption Reporting Project; GAIN Integrity;
International Budget Partnership; and U4 Anti-Corruption Resource Centre, for example. Through connecting stories and data in each of the case studies, the aim is to create a more complete understanding regarding Corruption, foreign development aid, and economic development thus, answering the ultimate question which guides this research effort.
Corruption is both a cause and a symptom of bad governance practices and poor development in general, and this claim is made known by myriads of scholars in previous studies. So, it would not be much of a stretch to apply this thought to foreign aid
effectiveness, especially when there are scholars who make it abundantly clear that
2009; Cornell, 2014; Easterly, 2003). Perhaps development aid can only be as strong and effective as the system it enters. As Asongu & Nnanna (2019) point out, when the aid is not readily available, the less reliant a country becomes. Therefore, in order to grow and succeed economically, country leadership must change and adapt for the better. Lyons, (2014) implies that corruption in aid schemes matters.
The decision behind granting the “foreign aid” or, to be specific, Official Development Assistance, in the context of this discussion, will be provided in greater detail in the latter part of this section. The other two variables considered for this research are A) corruption and B) economic conditions. Since development aid is meant to be especially allocated for improving economic conditions in its recipient nations, it is important to understand the general consensus of aid, its strengths and weaknesses in improving the economy according to experts. There is a multitude of opinions regarding the debate about whether or not aid has a beneficial impact to the economies of recipient nations. While some have conducted research that indicates that foreign aid has helped in achieving economic growth in a country (Ekanayake & Chatrna, 2010), it is worth noting that the authors attribute the success of aid in Nigeria to sound governance and economic policies. This is not a topic which can be fully understood with a simple, one dimensional answer, nor is it one that can be entirely disentangled from the discussion regarding governance practices, corruption, and the effects this has on aid effectiveness. It is a highly complex issue with a multitude of variables to be considered. Context needs to be clarified in order to make sense of the topic.
This research is specifically concerned with economic effects of foreign aid and the internal conditions of the subject countries. Narrowing the data to include only
official development assistance helps focus the scope of the study. For the purpose of this research, only ODA will be considered and sometimes described more broadly as foreign aid. Additionally, this discussion of “foreign aid” does not include debt relief, nor does it include military, humanitarian, crisis, or any other form of assistance in this capacity. Large contributions to militaries, for example, would not help the general public or substantially improve the economy long term. Not including these factors will prevent skewing the perceived amount of incoming aid to developing countries.
The trends in each of the states over the time period will be analyzed as well to see if the hypothesis remains consistent not only when comparing states but also within states over time. The time frame compromised of the years 2003–2018 represents the most recent years for which all of the data that will be studied is accounted for, and a
noticeable trend can emerge to be critically analyzed within the time period of a decade and a half as well. This remainder of this chapter operationalizes and analyzes the following concepts: foreign aid, corruption, and economic improvements. Further, the chapter later offers a detailed profile, analyzing each country, including a discussion of specific instances concerning corruption, economic fitness, and development assistance. Then comes a discussion of the validity of the hypotheses, and the results in general. Firstly, one must understand the larger concepts in the this study. In particular it is important to understand the data which illustrate the trends of ODA, the measure of foreign aid received, Corruption Perception Index (CPI) scores, the measure of corruption for this study, and the Economic Fitness ranking, which is the measure of economic conditions. The objective is to explain a possible emerging pattern in the dynamic relationship between aid, corruption, and economic fitness, as hypothesized in the previous chapter.
3.2 Data Analysis
Measuring Development Assistance
Official Development Aid (ODA) Received from 2003-2018
Figure 2 Source: WorldBank Official Development Assistance database
The figure above offers a comparative look at the official development assistance from the World Bank over a 15 year time period. Official development assistance is accessible via the World Bank and is considered to be a World Development Indicator. This is a collection that, “presents the most current and accurate global development data available, and includes national, regional, and global estimates,” (World Bank, 2020). The data above shows that a highly varied amount of aid is given to Sudan from one year
B illion s of Aid (US D) 0.00 0.75 1.50 2.25 3.00
Time (in Years)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sudan (pop. 42 million) Uganda (pop. 43 million) Algeria (pop. 42 million)
to the next. Further, one can see a steady increase in the amount of development aid that Uganda is receiving each year, and that, within the context of this study, Algeria receives a relatively low amount of assistance. It is pertinent to understanding the relationship outline by the hypotheses to compare the data of ODA received, to the measures of corruption scores and economic fitness. This study hypothesizes that increase in
development aid does not translated to improved economic conditions, operationalized by Economic Fitness measures, in the receiving countries due to intervening factors such as corruption. This point is highlighted in the Ugandan situation and is discussed further below.
According to Asongu & Nnanna (2019), the discussion of foreign aid instability and economic growth, the unpredictability of aid may actually create more incentive to improve economic conditions on their own accords; This is because the amount of foreign aid which the government will receive each year is largely unknown and unpredictable. More about the actual reality of these implications will be discussed in Sudan’s individual section later on. Furthermore, Uganda went from receiving approximately $1 billion per year in 2003 to $2.15 billion in 2018, more than doubling in just over a decade.
Understanding this in terms of both the goals of global development and economic organizations and scholars involved with development aid, researchers and practitioners would hope to see this increase in aid lead to improved economic fitness, (see Moyo, 2009 and Abuzeid, 2009). However, one of the arguments presented in this study would expect to see an increase in aid amount causing an increase in corruption levels and therefore lead to worsening economic conditions (see Lyons, 2014; Williams, 2009; Asongu, 2012).
There are a number of additional important conclusions to be drawn from the figure above includes highlighted various numbers in the dataset. For example, in 2008, Sudan, whose aid amount was the most erratic of the three case studies, received $2.5 billion US dollars in aid. This is greatly higher than any other receipt in this study in that year, and for the duration of the study in general. As mentioned above, this erratic
allocation of aid is thought to contribute to greater economic development according to Asongu & Nnanna (2019). In the context of this study, Algeria received the lowest
amount of development aid overall. The least amount received was in the year, 2015, with just over $70 million being allocated for development assistance. Furthermore, Uganda’s development assistance package is generally seen as increasing from 2003 to 2018, with some minor lulls in aid observed.
P ODA is prescribed to countries through various institutions in order to encourage and assist in the main goal of development within the recipient nation. Figure 2 shows the amount of development aid received each year, and it is an important figure to consider when exploring the relationship between the corruption and economic conditions measures. This measure also allows one to see the validity of H1 and H2, which both consider the presence of ODA to be important in the overall argument presented to explain the research question. At the start of the time-trend, in 2003, the order from most received to least received aid amount (Uganda, Sudan, and Algeria) fluctuates over the years and in 2018, the order ends up being the same, only the discrepancies between the amounts are greater. It is important that the data in figure 2 in particular is analyzed further with context being provided by the data in figures 3 and 4. In the next section, the measures of corruption and its general trends from 2003 to 2018 will discussed.
Measuring Corruption
Corruption Perception Index Scores from 2003-2018
Figure 3 Source: Transparency International CPI database
This study operationalizes corruption by utilizing the Corruption Perception Index (CPI) database provided by Transparency International, a global organization with the mission of fighting corruption. The organization prioritizes advocacy work, research, and projects related to corruption. The CPI assigns a score to the level of corruption in various countries on a numerical scale where low scores mean high perception of corruption. High scores indicate a country is relatively free of
corruption. The scores are derived from an analysis of 13 surveys and assessments on corruption conducted by institutions around the world, including data provided by
C PI S core 0 1 2 3 4
Time (in years)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
various think tanks, private consulting and risk companies, the World Bank, and the World Economic Forum. According to Transparency International, CPI is the most reputable and highly regarded indicator of corruption. Notably, Transparency International is not involved in any capacity in the production or execution of the surveys which are used produce the CPI score. It is also important to note that CPI scores and ranking are derived from various business executives and experts on the topic, and only cover the perception of public sector corruption. This includes things such as bribery, level of completeness and clarity in legal framework, access to
information from government organizations, and most importantly, diversion of public funds.
The scores in this case experienced a switch from a 10-point scale in the early years of the study, to a 100-point scale after 2012, making it easy to convert to the 10 point scale for the purpose of comparison and continuity. A score of 0-1 is the lowest that can be given, and it indicates a high level of corruption, whereas 10 (or 100) is the highest score that can be given to a country and it indicates an absence of corruption. A score of 9 out of 10 is unlikely, but a below 1 score (or 10) has been awarded on several occasions. For example, in 2018, the best received score was 8.8 (or 88) by Denmark and the lowest scoring country was Somalia with a 1 or (10). Somalia has been consistently scored at or below this number for over five years, making it the most corrupt country in the data. From the chart above, one can see that Algeria, Uganda, and Sudan are all relatively corrupt countries according to the CPI. Every
year, each of these countries received a score in the bottom half of the index. This makes it unnecessary to include scores of 5 or above on the y-axis.
Algeria, represented by the yellow line, had the highest scores of the countries in the study with an average score of 3.15 (or 31.5). The country scored its highest (3.6) in 2013, 2014, and 2015, and its lowest (2.6) in 2006. Sudan, represented by the blue line, has a less stellar performance with an average score of 1.62. It received its highest score (2.3) in 2003, the only year it was not the worst performing in this study, and its lowest score (1.1) in both 2013 and 2014. Uganda, represented by the green line, has an average score of 2.57 It received its highest score (2.9) in 2012 and its lowest (2.2) in 2003. In the last four years, Uganda experienced consistent
improvement in its score.
P
According to CPI data, the three countries in this case study are among the lowest scoring in the world. In order to provide further context in terms of the measure and the world of corruption in general, in 2003 70% of the countries in the top 10 least corrupt countries according to the index are located in Western Europe. The other 30% of the top 10 least corrupt countries are Australia, Singapore, and New Zealand. Algeria holds the 88th place in this year, while Sudan and Uganda come in at 106th and 113th respectively. Bangladesh received the worst placement in 2003 at 133rd place. Fast-forward to the same data for the year 2018, Denmark takes 1st place for the least corrupt country in the world, and the rest of the top 10 remains relatively the same with mainly countries from Western Europe, with the addition of Canada. Algeria received a worst placement on 105th, with Sudan and Uganda coming in at 172nd and 149th. Somalia rounds out the bottom at 180th place. This means that more countries were added in the global analysisin the year 2018 compared to 2003. However, by relying on the scores assigned to each country each year, rather than drawing conclusions from the ranking placement, provides the research with reliability and sustainability. The ranking in 2003 and 2018 were
provided in this case simply to contextualize the concept of corruption. In the next section, the measures of economic conditions and improvements from 2003 to 2018 will discussed.
Measuring Economic Conditions
Economic Fitness (EF) Rank Received from 2003-2018
Figure 4 Source: WorldBank Economic Fitness database
The Economic Fitness (EF) measure is a ranking which comes from the World Bank database. A numerical ranking closer to 1 indicates high levels of economic fitness and the further towards the bottom indicates poorer economic fitness. This measure, an annually updated time series under the topic of Economic Growth, was first created by the World Bank in 1995 and is available in the online World Bank data catalog. Economic Fitness is described as a,“measure of a country’s diversification and ability to produce complex goods on a globally competitive basis. Countries with the highest levels of EF
E F R an k R ec eiv ed 0 37.5 75 112.5 150
Time (in years)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
have capabilities to produce a diverse portfolio of products, ability to upgrade into ever-increasing complex goods, tend to have more predictable long-term growth, and to attain good competitive position relative to other countries,”(Wold Bank, 2020). EF offers a more unique angle or perspective on economic performance than other, more traditionally used indicators. Using this measure allows a more holistic outlook on economic health and performance of a country rather than looking to a measure such a gross domestic product (GDP), arguably the most widely used measure of economy, to indicate the success or struggles of an economy. The World Bank offers an explanation to illustrate the importance of considering the Economic Fitness measures and its results as it can reveal information that is traditionally hidden by GDP numbers when it comes to topics such as growth and development of countries and their economies. Countries with a poorer ranking on EF, “tend to suffer from poverty, low capabilities, less predictable growth, low value-addition, and trouble upgrading and diversifying faster than other countries,”(World Bank, 2020). Economic scores scores in this study tended not to vary so dramatically from one year to the next, but remained relatively stable. Perhaps to see changes in this measure, a greater time frame is needed to be observed as it is a hard-to-change variable.
Some important things to note based on the data in the graph above include highlighting the key points in each country which can be observed. One can observe Uganda as being consistently more economically fit, meaning receiving better EF ranking, than Sudan or Algeria. However, this is a relative statement regarding Uganda compared to other countries around the world, because it is objectively economically unfit according to the rankings. Sudan and Algeria remain near each other, close to the
bottom of the ranking year after year. In the year 2003, Uganda was ranked in 96th place, 40 places ahead of the other two countries. Algeria and Sudan were ranked 135th and 136th. Both remain relatively stable in their positions whereas one can see Uganda is generally trending towards a more fit economy over the course of the timeline. The reality that Sudan receives billions of dollars in development assistance from foreign donors while the EF rank remains stagnant and the CPI score is consistently low, proves that the aid efforts are not providing the foundation for successful economic development. Perhaps funding these inefficient, corrupt regimes, keeps them afloat longer which, without foreign aid, would likely be forced to change or dissolve altogether.
P When analyzing economic fitness irrespective of the other relevant measures, ODA and CPI, the data simply shows us that Uganda is fairing far better than Sudan or Algeria. Though Uganda still falls in the lower performing half of the ranking spectrum, Sudan and Algeria often switch ranks in the bottom 10 spots for countries with the poorest economic fitness. By applying this data to the data from the other relevant measures, and ultimately understanding this relationship in the context of within and comparative case analysis, it will provide answers to the original research question. The next section will consist of three deeper discussions regarding foreign aid and assistance utilization in Algeria, Sudan, and Uganda, to supplement and support the data above, as well as illustrate examples of corrupt behaviors.
3.3 Case Studies: Understanding Aid, Corruption & Development
This section consists of three case studies regarding the aforementioned countries of Algeria, Sudan, and Uganda. Each case consists of several examples of corruption within the country, as well as discussing aid and assistance within each country. Further, each section will utilize data derived from the figures above to further understand the implications and topic at large. Finally, it is important to understand the level of applicability this research holds in regards to the original arguments and theoriespresented early on. Following the presentation of the three case studies will be the section of understanding the findings, where the data and case studies are evaluated for their accuracy in either explaining, or not explaining, the logic of the hypothesis, H1 and H2.
While all cases were selected using the regional location and population size parameters, as mentioned perviously, the cases also represent different - or counter - existence to the other cases, making it advantageous to compare. For example, case study A, Algeria, serves as an example of a State being given less aid (compared to the others in this study) while still experiencing issues with corruption and economic conditions. Namely, other than the amount of ODA, case study A is similar to case study B, Sudan. This comparative look, as well as individually assessing each case, seeks to understand the role of ODA in the relationship between the variables and in the context of H1 and H2. case study C, Uganda, allows one to see an interesting case where corruption is heavily prevalent, yet economic fitness does not seem to be suffering as much as the other two cases. This case illustrates that ODA is being misappropriated and corruption remains an issue, but invites other explanations to be considered as neither H1 nor H2 seem to sufficiently explain case study C.
Case Study A: Algeria
Located in Northern Africa, a former French colonial stronghold, the People’s Democratic Republic of Algeria is led currently by President Abdelmadjid Tebboune and has a population of roughly 42 million people. According to the World Bank, from the years 2003 to 2018, Algeria has received over $3.58 billion USD in ODA. The goal of development assistance is clearly established in the name itself, and when comparing the amount of aid being received year after year to the subsequent economic fitness scores, one would hope to see that these billions are improving economic conditions in the country. However, this is not the reality of the situation with regard to Algeria and many other ODA recipient nations. As mentioned in the hypothesis above, corruption is possibly hindering the overall success and effectiveness of the aid. This possibly allows corruption to grow from continued funding through foreign aid programs. If ODA is rendered ineffective and actually becomes harmful for the countries and their ability thrive, this is grounds for arguing that the very foundation of the concept of aid schemes needs to be altered in order to better achieve its’ goals.
Corruptive Behavior in Governance
In the case of Algeria, one can see that the corruption perception index scores or CPI, consistently places in the bottom half of the index. This poor performance also happens to be the case for Algeria’s Economic Fitness ranking as well. Besides
understanding the data behind foreign aid, corruption, and economic fitness, it is equally as important to understand real life examples of corruption playing out and having an impact on aid effectiveness and economic development. To further add to the
data bases offers an in-depth discussion of its status across many sectors within the country. Formerly called the Business Anti-Corruption Portal, the Risk and Compliance Portal, produces country risk reports and legislation guides. The reports contain a “risk key” where the colors (green to red) are indicative of the level of corruption in a certain sector, covering the judicial system, police, public services, land, tax, and customs administration. The different levels of risk are Low (light green), Moderately Low (dark green), Moderate (yellow), Moderately High (orange), and High (red).
According to the experts with Gain Integrity, public services in Algeria are rendered inefficient and corrupt, which causes a plethora of issues as policies, practices and bureaucracy are largely opaque in nature (“Algeria Country Profile”, 2020).
Furthermore, the Risk and Compliance portal cites issues with Algeria’s legislative body when it comes to the handling of corruption in the country, (2020). Though in the recent years, there have been growing discussions of commitment to cleaning up corruption across the country as new public officials are installed. However, for the past several years, “The government has generally not been effective in implementing anti-corruption laws. The Algerian Penal Code and Anti-Corruption Law criminalizes passive and active bribery, facilitation payments, illicit enrichment, abuse of power, kickbacks, and influence peddling,” (“Algeria Country Profile”, 2020). As the legislation is largely ineffective in combating corruption, the judicial system in the country has received a red marking indicating high corruption risk, and according to the Transparency International 2013 Global Corruption Barometer study, Algerian judiciary is perceived to be the most corrupt of all public institutions in the country. The tax, land, and customs administrations, as well as public procurement and natural resources are all sectors receiving the worst risk
scores regarding corrupt behaviors, (“Algeria Country Profile”, 2020). To illustrate all of these notions, it is important to explore recent developments on the topic.
Connecting the Stories & Data
According to The North Africa Journal article “Algeria: Purge of former regime operatives continues”, there is a continued effort to fight institutional corruption since the installation of a new government (2020). There are prominent individuals in the country being brought up on charges of corruption before the high courts. Though it is becoming increasingly prevalent that instead of being a focused attack on corrupt behavior, it looks more like, “a continuation of a purge against former regime operatives,”(Algeria: Purge of Former Regime Operatives Continues, 2020). Recently, former Presidential candidate and Minister of Culture, Azzedine Mihoubi, was called upon to answer a legal question about an apparent misuse of public funds. He was directly implicated in a scandal of using these public funds in money laundering and embezzlement schemes from 2015 to 2019. In 2020, former Governor Zoukh of Algiers, was sentenced to five years in prison by the courts for corrupt behavior regarding misuse of public land when he was in office from 2013 to 2019. Perhaps more concerning, according to Laura Mallene at the
Organized Crime and Corruption Reporting Project, OCCRP, half a million Algerian jobs have been impacted, and ultimately lost, because of corruption, (2019). This came after the resignation of President Bouteflika, as top businessmen closely aligned to him became subject to investigations. “Those arrested include Algeria’s richest man, Isaad Rebraab, a loud critic of Bouteflika, whose net worth is more than $3 billion, and the four Kouninef brothers accused of getting governmental concessions and huge unsecured
being let go without any severance package or safety net; additionally, seventy-percent of companies in the construction and irrigation sectors were forced with the decision to close their doors, (“Half a Million Algerian Workers Jobless Following Corruption
Investigations”, 2019). These few examples are just the most recent in the tip of the iceberg when it comes to public and private sector corruption in Algeria.
The intertwined relationship between crooked government officials and top businessmen in the country has proven to be a breeding ground for corrupt behaviors and actions. The apparent crusade against this institutional status quo is also thought to be a disingenuous action to “clean house” of the old establishment rather than to truly fight corruption at its core. Keeping in mind the millions of US dollars in development
assistance being allocated to the government in order to improve the economic fitness of Algeria, it becomes increasingly clear that this particular mission is likely rendered impossible given the conditions. As hypothesized, the pervasive corruption in Algeria has made it impossible for ODAs to significantly improve the country’s EF. The high number of government officials fingered in corruption cases show that governance practices are contributory factors to Algeria’s poor EF. Ensuring that the bureaucratic framework and legal mechanisms within the larger institutions are functioning to successfully enforce and implement policies and practices, including the proper utilization of foreign aid or assistance, is pertinent to the improvement of economic conditions. When examining specific cases of corrupt behaviors in Algeria, the understanding of the failures and lackluster economic fitness rankings and corruption perception index scores becomes increasingly clear and justified.
Case Study B: Sudan
Located in Northern Africa, the Republic of Sudan, led currently by Prime Minister Abdalla Hamdok, has a population of roughly 42 million people. According to the World Bank, from 2003-2018, Sudan received approximately $23 billion dollars, averaging $1.4 billion per year. This is significantly more development assistance than the aforementioned Algeria, although it does not appear to grant them a better economic standing and only translates to a slightly improved corruption score. Sudan’s average CPI score received during these years is 1.5, and has been steadily declining, growing more corrupt. At the same time, Economic Fitness scores have been relatively stable at a low level, and the amount of aid is highly variant. Here, one can see a gap in the previously mentioned argument and understanding developed by Asongu & Nnanna (2019)
regarding foreign aid instability and economic growth; according to them, the
unpredictability of aid is thought to create an incentive to improve economic conditions on their own volition. However, with the general decrease in aid over the years, the Economic Fitness remains the same, as does the corruption, which is hypothesized to be severly impacting economic growth and foreign aid effectiveness. To further understand this topic, it is important to delve into the corrupt behaviors of governance practices within Sudan, as well as correlate the stories and data for a clearer picture.
Corruptive Behavior in Governance
As mentioned above, Sudan has struggled with corruption resulting in low CPI scores despite the recent improvement in this measure in the last few years on the study timeframe. As hypothesized, where corruption is prevalent, it appears ODA unable to
contribute to improvements to economic conditions. Therefore, it is important to cover corrupt behavior in governance practices. Though this improvement is rather insignificant as corruption remains high according to other sources. The Risk and Compliance portal from Gain Integrity (2020), outlines the status of Sudan, which they claim to be one of the most corrupt countries in the world. The report outlines corrupt behavior such as bribery as being widely practiced across government services and also indicates the judicial system, legislation and police, as well the other included sections to be “red”, or highly corrupt in nature. This corrupt behavior is made possible by an unsupportive legal structure. This enforcement is weak because, “Sudan’s legislative framework pertaining (to) anti-corruption is not very comprehensive and lacks enforcement. Officials suspected of corruption are usually not investigated and go unpunished,”(“Sudan Corruption
Report”, 2020). According to Kukutschka (2017), there are many societal elements that allow corrupt behaviors to thrive in Sudan. These “drivers” are cited as: the absence of checks & balances, undue administrative burden, inappropriate close relations between politicians and businesspeople, systematic human rights violations, lacking political opposition and rule of law, (Kukutschka, 2017 pp.4-5). Besides understanding the numbers and data, it is important to contextualize this phenomena with relevant examples.
Connecting the Stories & Data
Reporter Larisa Epatko, contributor to PBS.org, wrote of the Vice President of South Sudan’s response to substantial evidence of aid funds being misused by top country leaders, (2016) . In a NewsHour interview, VP Deng Gai denied the validity of
investigation report. What is particularly troubling, Epatko explains, is that the President is accused of purchasing an expensive property in the Nairobi suburbs with illegitimate funds, as well as multiple houses in Australia, (2016). The report showed that corruption and aid misuse start from the very top of government. Furthermore, the report claims that “Sudanese politicians were spending international aid on mansions and fancy cars, and giving expensive contracts to family members,” (Epatko, 2016). Vice President Deng Gai explains that while he believes corruption is a problem that should be solved, he considers the report to possibly contain false information. Further, the International Growth Centre, or IGC, published an article in 2015 covering specifically covering how African leaders misuse development finance particularly coming from Chinese sources. There is a presence of animosity held by many African leaders towards western donor countries such as the United States, as being imposing and overbearing compared to the assistance offered by the Chinese which have standardized the concept of country ownership, (Dreher et al., 2015). This means that aid, be it grants, loans, or other forms of assistance are largely not conditioned by a set of rules or agreements between the parties to ensure proper utilization in the name of respecting the autonomy of the recipient country.
Numerous scholars, such as Easterly (2003) and Williams (2011), have made it clear that development aid not tied to policy or practice reformation will likely finance inappropriate consumption in an inefficient regime. A Sudanese official went on record to explain the preference for China over Western donors. He claims the Chinese leave Sudan to appropriate the aid in the way it sees fit while Western donors provide conditioned assistance based on what they think is the best for Sudan. Dreher et. al., uncover a pattern of inappropriate allocation of aid funds to the home region of current leaders, offering the reasoning behind this to be, “China’s procedures for allocating aid (as it) gives political
leaders in aid-receiving countries more discretion in siting development projects compared to those from Western donors,”(2015, para. 2). One could argue that the unaccompanied aid being received from China in this example will further fuel corrupt actions and behaviors which impede economic improvements.
Corruption in Sudan appears to have an impact on the ability of foreign
development assistance to make meaningful strides in the economic development of the country. Illustrated by the examples and instances above, one can observe the tangible consequences that corrupt behaviors have on the ability and effectiveness of development assistance, and the health of the economy at large. For example, when analyzing the CPI scores of Sudan (figure 2) in relation to the Economic Fitness rankings of Sudan over the years illustrated in Figure 3, it becomes clear that the billions in aid, outlined in figure 1, received is largely ineffective in improving the economic conditions. Despite millions of US dollars in development assistance being offered to Sudan over the years, the corrupt behavior generally worsens over time, and the economic fitness ranking remains
stagnantly unimpressive. The relationship between the amount of ODA received and Economic Fitness rank assigned seems to be nonexistent, meaning that the economy is not experiencing meaningful improvements if more or less aid is given. There is no substantial difference in Sudan’s EF ranking (141) from when it received its highest development assistance ($2.6 billion) in 2008, and its EF ranking (137) when it received its lowest ($700 million) in 2016. In addition, the years the above discussed reports on corrupt practices were made coincide with years of low CPI scores. Being just above 1, the worst observed throughout the study timeframe. U4’s Anti-Corruption Resource Centre offers an overview of the situation in Sudan, calling it, “one of the most
report cites information specifically regarding corrupt behaviors within the public finance management sector, which is of interest to this research. Namely, the discussion about the opacity of publishing documents and resources regarding matters of local and national budgets tends to be an issue as it breeds public distrust by allowing corruption to occur without the ability for “watchdogs” to provide third-party oversight, (Kukutschka, 2017). The strong link between data, statistics, and reports from several institutions,
organizations, and scholarly sources is reiterated by the documentation of instances of corruption by media outlets.
