The Effect of Aid Dependency and Quality of Institution in Alleviating Poverty in IDA Countries

Poverty alleviation has been a topic of much discussion ever since the Millennium Development Goals were set by World Bank in the 1990s. This paper examines to what extent aid dependency and quality of institution affect 31 IDA countries in achieving the first of eight MDG. The study provides evidence that although these IDA countries experience a decrease in poverty, it may not be enough to meet MDGs by 2015. Aid dependency increases the poverty level whereas some Quality of Institution indicators such as control of corruption, rule of law and regulatory quality have greater impact in reducing poverty than other indicators