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Foreign Aid, Aid Uncertainty And Private Investment In West Africa: An Unobserved Country Effects Model

  • EBERECHUKWU UNEZE

    ()

    (Centre for the Study of the Economies of Africa, Nigeria)

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    This paper examines whether foreign aid has any impact on private investment in West Africa, taking other determinants of private investment into account. Following from this, the paper investigates whether multilateral aid and bilateral aid affect private investment differently. In a related analysis, the paper examines the impact of aid uncertainty (aid volatility) on private investment. The results show that multilateral aid affects private investment positively, but not bilateral aid, and uncertainty measured as the coefficient of variation has a negative impact on private investment and therefore reduces the impact of aid on private investment.

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    File URL: http://www.jed.or.kr/full-text/37-4/5.pdf
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    Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

    Volume (Year): 37 (2012)
    Issue (Month): 4 (December)
    Pages: 101-123

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    Handle: RePEc:jed:journl:v:37:y:2012:i:4:p:101-123
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    1. Collier, Paul & Dollar, David, 1999. "Aid allocation and poverty reduction," Policy Research Working Paper Series 2041, The World Bank.
    2. Khan, Mohsin S. & Reinhart, Carmen M., 1990. "Private investment and economic growth in developing countries," World Development, Elsevier, vol. 18(1), pages 19-27, January.
    3. Serven, Luis & Solimano, Andres, 1992. "Private Investment and Macroeconomic Adjustment: A Survey," World Bank Research Observer, World Bank Group, vol. 7(1), pages 95-114, January.
    4. Levy, Victor, 1988. "Aid and growth in Sub-Saharan Africa: The recent experience," European Economic Review, Elsevier, vol. 32(9), pages 1777-1795, November.
    5. Rati Ram, 2003. "Roles of Bilateral and Multilateral Aid in Economic Growth of Developing Countries," Kyklos, Wiley Blackwell, vol. 56(1), pages 95-110, February.
    6. Martin Mühleisen & Dhaneshwar Ghura & Roger Nord & Michael T. Hadjimichael & E. Murat Ucer, 1995. "Sub-Saharan Africa; Growth, Savings, and Investment, 1986-1993," IMF Occasional Papers 118, International Monetary Fund.
    7. Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank.
    8. Fleck, Robert K. & Kilby, Christopher, 2005. "How Do Political Changes Influence U.S. Bilateral Aid Allocations? Evidence from Panel Data," Vassar College Department of Economics Working Paper Series 67, Vassar College Department of Economics.
    9. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
    10. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    11. Kwabena Gyimah-Brempong, 1992. "Aid and economic growth in LDCs: Evidence from Sub-Saharan Africa," The Review of Black Political Economy, Springer, vol. 20(3), pages 31-52, March.
    12. Mahdavi, Saeid, 1990. "The Effects of Foreign Resource Inflows on Composition of Aggregate Expenditure in Developing Countries: A Seemingly Unrelated Model," Kyklos, Wiley Blackwell, vol. 43(1), pages 111-37.
    13. Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
    14. Abdulnasser Hatemi-J & Manuchehr Irandoust, 2005. "Foreign Aid And Economic Growth: New Evidence From Panel Cointegration," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 71-80, June.
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