TY - JOUR
T1 - Elite Capture of Foreign Aid
T2 - Evidence from Offshore Bank Accounts
AU - Andersen, Jørgen Juel
AU - Johannesen, Niels
AU - Rijkers, Bob
PY - 2022
Y1 - 2022
N2 - Do elites capture foreign aid? This paper documents that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management but not in other financial centers. The estimates are not confounded by contemporaneous shocks—such as civil conflicts, natural disasters, and financial crises—and are robust to instrumenting using predetermined aid commitments. The implied leakage rate is around 7.5% at the sample mean and tends to increase with the ratio of aid to GDP. The findings are consistent with aid capture in the most aid-dependent countries.
AB - Do elites capture foreign aid? This paper documents that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management but not in other financial centers. The estimates are not confounded by contemporaneous shocks—such as civil conflicts, natural disasters, and financial crises—and are robust to instrumenting using predetermined aid commitments. The implied leakage rate is around 7.5% at the sample mean and tends to increase with the ratio of aid to GDP. The findings are consistent with aid capture in the most aid-dependent countries.
U2 - 10.2139/ssrn.3551078
DO - 10.2139/ssrn.3551078
M3 - Journal article
VL - 130
SP - 388
EP - 425
JO - Journal of Political Economy
JF - Journal of Political Economy
SN - 0022-3808
IS - 2
ER -