Exploring the effect of the Arab Spring on the relationship between foreign aid and corruption

Abstract

The foreign aid-corruption relationship is a controversial unresolved topic, which has not been explored adequately in the context of popular and bloody uprisings such as the 2010–2011 Arab Spring. We examine the quantitative effects of the Arab Spring on the foreign aid corruption relationship, using 2SLS and Generalized Method of Moments (GMM) to address the problems of causality, misspecification, and nonlinearity, which arise in Ordinary Least Squared (OLS) models. We find support for a positive relationship between foreign aid and corruption in Arab States and show that this relationship strengthened following the Arab Spring. Results suggest uprisings against authoritarian regimes can result in counter-productive outcomes when regimes are not overthrown, or simply replaced by a new form of dictatorship, or military coup d’etat.