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Aid Fragmentation and Aid Effectiveness in Sub-Saharan Africa

Author

Listed:
  • Bernardin Senadza
  • Richmond Addison
  • Albert Duodu

    (University of Ghana, Ghana)

Abstract

This paper examines the effect of aid fragmentation on the aid-growth nexus in Sub-Saharan Africa from 1990-2017. Aid fragmentation is measured by both the concentration index (Herfindahl index and ratio of contribution by largest three donors) and donor counts (total number of donors and number of small donors). We find a significant negative effect of aid fragmentation on the effectiveness of aid to stimulate economic growth based on the concentration index. We did not find any significant relationship between aid fragmentation and aid effectiveness when we employed the instrumental variable approach. The results point to a positive impact of the economic policy environment in the recipient countries on economic growth. The policy environment and the level of aid fragmentation in the recipient countries are found to have a combined positive moderating effect on the aid-growth nexus.

Suggested Citation

  • Bernardin Senadza & Richmond Addison & Albert Duodu, 2024. "Aid Fragmentation and Aid Effectiveness in Sub-Saharan Africa," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 14(1), pages 40-56.
    • Handle: RePEc:afj:journ3:v:14:y:2024:i:1:p:40-56
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v14_n1_a4
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    More about this item

    Keywords

    Aid effectiveness; Aid fragmentation; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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