The Shadow of Official Development Assistance

ODA, Corruption, and the Shadow Economy in Recipients

Bibliographic Data

ID6274145
AuthorsChungshik Moon (0000-0002-2753-4569, Chung-Ang University , South Korea), Youngwan Kim (0000-0002-4909-8622, Sogang University , South Korea), Da Sul Kim (0000-0003-0515-7878, Georgetown University)
Year2024
Volume68
Issue2
Publication date2024-03-14
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueInternational Studies Quarterly (JOURNAL)
Journal identifiersISSN: 0020-8833 • E-ISSN: 1468-2478
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/isq/sqae070
OpenAlexW4394936989
LanguageEN
Citations received2
References cited69

s While the shadow economy seems to have both positive and negative effects on a country’s macroeconomy, almost all governments have attempted to control the shadow economy to prevent the loss of tax revenues and the attendant impact on the government budget. Even though official development assistance (ODA) has no formal link with the shadow economy, we often observe a relationship between the two in recipient countries. We argue that ODA can increase the size of the shadow economy in recipient countries through both government and individual-level flows of ODA to the shadow economy. We analyzed data on the shadow economies of 107 ODA recipients from 1990 to 2018 using both fixed effect and Driscoll–Kraay estimators. The results show that recipients receiving a higher volume of ODA are more likely to have a larger shadow economy. Moreover, the relationship between ODA and the shadow economy is stronger in more corrupt recipients. We dealt with endogeneity issues using the generalized method of moments, which supported our findings

Economic system · Economics · Economy · Language change · Political science · Shadow (psychology · Fiscal Policy and Economic Growth · Philosophy · Poverty, Education, and Child Welfare · Psychology · Taxation and Compliance Studies

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