Corruption, foreign aid and welfare of the poor

腐敗, 國際援助以及貧窮人口的福利水平

Student thesis: Master's Thesis

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  • Xindun LI

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Awarding Institution
Award date2 Oct 2009


This research studies the impact of foreign aid and corruption on the welfare of various classes of people in an economy which receives foreign aid and uses it to finance a public good. We formulate and analyze a 3×3 general equilibrium model with foreign aid and corruption. Our results show that, under certain circumstances, the poor in the recipient country may even get worse off with more aid when corruption is rampant. By calibrating the model to data from Kenya and other African aid recipient economies, we provide empirical evidence to support the counter-intuitive result: that foreign aid could be welfare immiserizing. Keywords: Foreign aid; Corruption; Welfare; Income Gap; Poor; Aid Recipient Economy; General Equilibrium; Immiserizing.

    Research areas

  • Economic aspects, Political corruption, Economic assistance