The Allocation of Net Official Development Assistance: The Role of Corruption and Influence on Standard of Living

Abstract

This paper utilizes data from The World Bank Group’s Foreign Aid Effectiveness indicators to analyze the determinants of official development assistance aid to countries that are considered more or less corrupt. I utilize an OLS population regression function, with fixed effects, time series models, and an instrumental variable, as determined by the existing literature and my own determinations. My results indicate that the population’s accessibility to improved sanitation facilities and school enrollment of children in primary and secondary schools are statistically significant indicators of net official development assistance allocation to countries, regardless of their perceived corruption rating. These findings suggest that in order to properly allocate official development assistance aid, The World Bank Group should consider the indicators of accessibility to improved sanitation facilities and school enrollment in future policymaking decisions and allocations of aid

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