covered by ICRG data is also controlled for, because countries have more opportunity to improve (or worsen) the quality of their bureaucracies over a longer time.<sup>21</sup> Increases in per capita income could improve bureaucratic quality by increasing tax revenues if government funds are a binding constraint. If bureaucratic quality is inferred by ICRG in part from observations of economic performance, controlling for changes in per capita income may have the effect of removing spurious changes in scores.

Bureaucratic quality of governance may be influenced by numerous other factors, such as religious or legal traditions, or colonial heritage (see Swamy et al. 2001; Treisman 2000; La Porta et al. 1999). A convenient implication of using the _change_ in bureaucratic quality as the dependent variable is that factors such as these, which are invariant over very long periods of time, are unlikely to matter much. In contrast, it is unlikely that the quality of the bureaucracy would have fully adjusted to aid intensity and fragmentation already by the beginning of the sample period considered here, as donor proliferation began in earnest only in the 1970s and continued building up into the 1980s (Morss 1984: 465).<sup>22</sup> Results are shown in Table 1. Equation 1 includes all aid recipients with initial per capita incomes (measured at purchasing power parity) below $7,000, and with aid/GNI averaging more than .03 percent. Improvement in bureaucratic quality is associated with lower initial levels of bureaucratic quality, as expected, and with a longer time spell over which data on bureaucratic quality are available. Improvement is greater where GDP growth is higher, although the significance of this relationship is marginal and causality likely goes in both directions (Chong and Calderon 2000). Both aid variables are significant: higher levels of aid, and greater fragmentation of aid (computed from project counts) are associated with larger declines in bureaucratic quality. A 12 percentage point increase in aid/GNI is associated with a half-point drop in quality of the bureaucracy.<sup>23</sup> A similar-sized decrease in bureaucratic quality is associated with an increase of 30 in the 0-100 donor fragmentation index.

an artifact of sample selection bias.

21 Countries are included in the sample only if there are at least three years of ICRG data on bureaucratic quality available. The average in our main high-aid sample is 16.4 years, out of a maximum of 19.

22 For all developing countries, aid/GNP averaged about 2 percent, 3 percent, 5 percent and 6 percent, respectively, in the 1960s, 1970s, 1980s, and 1990s. For Sub-Saharan Africa, the figures are 3 percent, 7.5 percent, 11.2 percent and 15.3 percent. For all developing countries, donor fragmentation averaged .56 in 1975 and .69 in 2000. For Africa, the figures are .69 and .83.

23 Using similar methodology and data, Knack (2001) finds that higher aid levels were associated with declines in the quality of governance, as measured by an index of corruption, rule of law, and bureaucratic quality variables from the ICRG. Knack (forthcoming) finds no evidence that higher aid levels promoted democratization, based on the Freedom House measures of political freedoms and civil liberties over the 1975-2000 and 1990-2000 periods. Neither study addresses donor fragmentation (or altruism) issues.

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