IDEAS home Printed from https://ideas.repec.org/a/ibn/ijefaa/v9y2017i5p87-93.html
   My bibliography  Save this article

The Impact of Foreign Aid on Economic Growth in Morocco: Econometric Analysis Using VECM

Author

Listed:
  • Kawthar Aghoutane
  • Mohamed Karim

Abstract

The present work aims to contribute to the empirical literature on the effectiveness of Foreign aid in Morocco. We use the Vector Error Correction Model (VECM) to jointly capture the long-run relationship and short-run dynamics between Official Development Assistance and economic growth. Other variables such as investment, exports, and government consumption are also included in the model. The results indicate that the foreign aid promotes growth through government consumption in the short term. However, the impact of aid on economic growth becomes negative in the long term.

Suggested Citation

  • Kawthar Aghoutane & Mohamed Karim, 2017. "The Impact of Foreign Aid on Economic Growth in Morocco: Econometric Analysis Using VECM," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(5), pages 87-93, May.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:5:p:87-93
    as

    Download full text from publisher

    File URL: http://ccsenet.org/journal/index.php/ijef/article/view/67727/36708
    Download Restriction: no
    File URL: http://ccsenet.org/journal/index.php/ijef/article/view/67727
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Heng Hokmeng & Pahlaj Moolio, 2015. "The Impact of Foreign Aid on Economic Growth in Cambodia: A Co-integration Approach," KASBIT Business Journals (KBJ), Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 8(1), pages 4-25, May.
    2. Minoiu, Camelia & Reddy, Sanjay G., 2010. "Development aid and economic growth: A positive long-run relation," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 27-39, February.
    3. Papanek, Gustav F, 1972. "The Effect of Aid and other Resource Transfers on Savings and Growth in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 82(327), pages 934-950, September.
    4. Malik, Girijasankar, 2008. "Foreign Aid and Economic Growth: A Cointegration Analysis of the Six Poorest African Countries," Economic Analysis and Policy, Elsevier, vol. 38(2), pages 251-260, September.
    5. Sandrina Berthault Moreira, 2005. "Evaluating The Impact Of Foreign Aid On Economic Growth: A Cross-Country Study," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 25-48, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dhahri, Sabrine & Omri, Anis, 2020. "Foreign capital towards SDGs 1 & 2—Ending Poverty and hunger: The role of agricultural production," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 208-221.
    2. Sabrine Dhahri & Anis Omri, 2020. "Does foreign capital really matter for the host country agricultural production? Evidence from developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(1), pages 153-181, February.
    3. Ummya Salma & Md. Fazlul Huq Khan & Md. Masum Billah, 2023. "Foreign Capital and Economic Growth: Evidence from Bangladesh," Papers 2312.04695, arXiv.org.
    4. Dervis Kirikkaleli & Ibrahim Adeshola & Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi, 2021. "Do foreign aid triggers economic growth in Chad? A time series analysis," Future Business Journal, Springer, vol. 7(1), pages 1-17, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Innocent .U. Duru & Bartholomew .O.N. Okafor & Millicent Adanne Eze & Gabriel .O. Ebenyi, 2020. "Foreign Aid and Economic Growth: Empirical Evidence from Nigeria," Growth, Asian Online Journal Publishing Group, vol. 7(1), pages 35-50.
    2. Jiang Hongli & Prince Asare Vitenu‐Sackey, 2023. "Assessment of the effectiveness of foreign aid on the development of Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 79-92, January.
    3. Tadesse, Tasew, 2011. "Foreign aid and economic growth in Ethiopia," MPRA Paper 33953, University Library of Munich, Germany, revised 20 Sep 2011.
    4. Saima Liaqat & Hafiz Khalil Ahmad & Temesgen Kifle & Mohammad Alauddin, 2019. "The Aid, Macroeconomic Policy Environment and Growth Nexus: Evidence from Selected Asian Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(1), pages 83-102, Jan-June.
    5. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    6. Kalpana Sahoo & Narayan Sethi, 2017. "Impact of Foreign Capital on Economic Development in India: An Econometric Investigation," Global Business Review, International Management Institute, vol. 18(3), pages 766-780, June.
    7. Evelyn Wamboye & Abel Adekola & Bruno S. Sergi, 2014. "Foreign aid, legal origin, economic growth and Africa’s least developed countries," Progress in Development Studies, , vol. 14(4), pages 335-357, October.
    8. Tiwari Aviral Kumar, 2011. "Foreign Aid, FDI, Economic Freedom and Economic Growth in Asian Countries," Global Economy Journal, De Gruyter, vol. 11(3), pages 1-28, September.
    9. Mehmet Balcilar & Berkan Tokar & Olasehinde-Williams Godwin, 2020. "Examining the interactive growth effect of development aid and institutional quality in Sub-Saharan Africa," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 12(4), pages 361-376, October.
    10. Wamboye, Evelyn & Adekola, Abel, 2013. "Foreign Aid, Legal Origin, Economic Growth and Africa’s Least Developed Countries," MPRA Paper 47846, University Library of Munich, Germany.
    11. Shagufta Sultana, "undated". "Does Foreign Aid Affect Economic Growth In Pakistan? A Disaggregate Analysis," Review of Socio - Economic Perspectives 201945, Reviewsep.
    12. Wamboye, Evelyn, 2012. "Quantity or quality? foreign aid implications on economic growth in least developed countries," MPRA Paper 39518, University Library of Munich, Germany.
    13. Saima Liaqat & Temesgen Kifle & Mohammad Alauddin, 2016. "Aid-Macroeconomic Policy Environment- Growth Nexus: Evidence from Selected Asian Countries," Discussion Papers Series 565, School of Economics, University of Queensland, Australia.
    14. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    15. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    16. Feeny, Simon & Fry, Tim R.L., 2014. "How sustainable is the macroeconomic impact of foreign aid?," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1066-1081.
    17. Patrick Guillaumont, 2011. "Aid effectiveness for poverty reduction:macroeconomic overview and emerging issues," CERDI Working papers halshs-00554285, HAL.
    18. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    19. Blessing Chiripanhura & Miguel Niño‐Zarazúa, 2015. "Aid, Political Business Cycles and Growth in Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(8), pages 1387-1421, November.
    20. Denizer, Cevdet & Kaufmann, Daniel & Kraay, Aart, 2013. "Good countries or good projects? Macro and micro correlates of World Bank project performance," Journal of Development Economics, Elsevier, vol. 105(C), pages 288-302.

    More about this item

    Keywords

    foreign aid; ODA; economic growth; VECM; Morocco;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijefaa:v:9:y:2017:i:5:p:87-93. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.