Corruption and Aid

1. Corruption and Aid Sierra Forbes SierraForbes@gmail.com American University School of International Service

2. Research Question & Research hypothesis • Does the amount of Official Development Assistance a country receives only serve to exacerbate its perceived corruption level? • Is restricting a country’s ODA a potential tool for fighting corruption? • There is a relationship between the level of corruption in a country and its ODA. • The greater the ODA, the higher the country’s level of perceived corruption. • Ho= There is no significant difference between a country’s corruption level and its ODA. • Ho= There is no significant difference between a country’s corruption level and its: • GDP Per Capita PPP • Kaufmann’s Governmental Regulatory Wuality • Adult Literacy Rates • Official Development Assistance (ODA) received as Net Disburments (% of GDP) • H1= There is a significant difference between a country’s corruption level and its ODA. • H1= There is a significant difference between a country’s corruption level and its: • GDP Per Capita PPP • Kaufmann’s Governmental Regulatory Wuality • Adult Literacy Rates • Official Development Assistance (ODA) received as Net Disburments (% of GDP)

3. Background Info • The concept of a country’s absorptive capacity essentially refers the idea that there are limits to how much aid a given country has the ability to manage or use productively in order to produce growth. [(Rosenstein-Rodan, 108) (Lensink, 52)]. This concept has become central to the recent debate about aid effectiveness because it suggests that there are diminishing returns to aid, and that after such limits are reached, aid can be harmful (Lensink, 52). • ↑money supply: ↑inflation: ↓ value of currency: ↑price level: ↑interest rates: ↓investment: ↓GDP/growth

4. Data • Unit of analysis : country • Source of the data- Driving Democracy Data • Transparency International • World Bank • UN Development Program • Dependent variable/s • Y is the Corruption Level as measured by Transparency International’s 2007 survey. • Unit of measurement= country. • Interval Ratio Variable • Independent Variable • X1 is Official Development Assistance (ODA) received as net disbursements (as % of GDP) • X2 is the Adult Literacy Rate (15+) from 2004. • X3 is GDP Per Capita (ppp) 2006 • X4 is Government Regulatory Quality.

5. Descriptive Statistics Table or/and Graphics • CPI ranges from 140 to 9.40. The average CPI in 2007 was 3.9868. • Independent Variables: • GDP per capita, in terms of ppp in 2006, ranges from $93 to $54,779, with an average GDP per capita of $7,455.72. • Government regulatory quality ranges from -2.70 to 1.85, with an average score of -.600. • - Adult Literacy Rate ranges from 0% of the population to 100%, with an average literacy rate of 58.4213% • -ODA ranges from -.10 to 59.00 (received as net disbursements as a % of GDP). The average for all countries is 8.2339.

6. Bivariate analysis • There does seem to be some correlation between my dependent variable, the 2007 CPI, and my independent variables. • -Stronger correlation between 2007 CPI and GDP Per Capita PPP and Government Regulatory Quality. • Strong, positive association for GDP Per Capita PPP and Government Regulatory Quality. • Weak, negative association with ODA and Adult Literacy Rate

7. Regression Analysis

8. Findings & Policy Implications of the research • Findings: • It appears as though my research hypothesis concerning ODA and corruption was incorrect. There appears to be no significant difference between the variables for corruption and ODA, indicting that my research hypothesis is not valid. • The variables for Regulatory Quality and GDP per capita PPP seem to be the most significant with regard to a country’s corruption level. • Policy implications of your findings?