The Impact of Foreign Aid on Institutional Quality in East Africa

Abstract

There have been divergent views on the impact of foreign aid on institutional quality dimensions in East Africa. While some views are of the opinion that aid has negative impact on institutional quality, others holds the view that they aid positively affect institutional quality. In order to ascertain which view holds for East African countries, this study analysis the impact of foreign aid on institutional quality in East African countries. The study utilizes panel data of 5 East African countries for the period between 1996 and 2016.Using fixed effect estimation technique, the study presents robust results which reveals that indeed foreign aid affects institutional quality negatively confirming the perilous effect of foreign aid on institutional quality.