Do Corrupt Governments Receive Less Foreign Aid?
NBER Working Paper No. 7108
Critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies. Supporters argue that foreign aid can be used to reward good governments. This paper documents that there is no evidence that less corrupt governments receive more foreign aid. On the contrary, according to some measures of corruption, more corrupt governments receive more aid. Also, we could not find any evidence that an increase in foreign aid reduces corruption. In summary, the answer to the question posed in the title is 'no.'
Published: Alesina, Alberto and Beatrice Weder. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, 2002, v92(4,Sep), 1126-1137.