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The Effect of Official Development Assistance on Domestic Savings and Economic Growth in Egypt

Author

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  • Rasha M. Elakkad
  • Asmaa M. Hussein

Abstract

The Egyptian economy has passed through several overlapping phases of economic development over the last decades, starting in 1950s. However, the launch of the Open Door Policy in 1974 allowed a greater role for official development aid funds to finance economic growth. In economics literature, the role of foreign aid in financing economic growth and complementing domestic savings has been controversial. This paper firstly, outlines in general main types and channels of foreign aid; secondly, gives a historical overview of foreign aid and thirdly; investigates the impact of official development assistance on domestic savings and thus on economic growth in Egypt over the period of 1965 to 2020 according to data available from the World Bank. The empirical analysis is conducted through a two-equation model through which the researchers have concluded contradictory results where foreign aid positively affects gross domestic savings and negatively affects economic growth.

Suggested Citation

  • Rasha M. Elakkad & Asmaa M. Hussein, 2021. "The Effect of Official Development Assistance on Domestic Savings and Economic Growth in Egypt," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(12), pages 1-33, December.
    • Handle: RePEc:ibn:ijefaa:v:13:y:2021:i:12:p:33
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    References listed on IDEAS

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    1. Hong Zhou & Jun Zhang & Min Zhang, 2015. "Foreign Aid in China," Springer Books, Springer, edition 127, number 978-3-662-44273-9, January.
    2. Papanek, Gustav F, 1973. "Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 120-130, Jan.-Feb..
    3. Burke, Paul J. & Ahmadi-Esfahani, Fredoun Z., 2006. "Aid and growth: A study of South East Asia," Journal of Asian Economics, Elsevier, vol. 17(2), pages 350-362, April.
    4. Simeon Djankov & Jose G. Montalvo & Marta Reynal-Querol, 2006. "Does Foreign Aid Help," Cato Journal, Cato Journal, Cato Institute, vol. 26(1), pages 1-28, Winter.
    5. Griffin, Keith, 1970. "Foreign Capital, Domestic Savings and Economic Development," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 32(2), pages 99-112, May.
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    Cited by:

    1. Hervé Nenghem Takam & Roger Tsafack Nanfosso, 2024. "Importance of official development assistance in improving the economic cycles of Economic and Monetary Community of Central Africa countries," SN Business & Economics, Springer, vol. 4(7), pages 1-22, July.
    2. Omenda Purity Awino & Urbanus Mutuku Kioko, 2022. "The Effect of Official Development Assistance Aid on Economic Growth and Domestic Savings in Kenya," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(4), pages 63-77.

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    More about this item

    JEL classification:

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

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