IDEAS home Printed from https://ideas.repec.org/a/sae/jodeso/v25y2009i1p57-83.html
   My bibliography  Save this article

Foreign Aid and the Human Development Indicators in Sub-Saharan Africa

Author

Listed:
  • Johnson P. Asiama

    (Research Department, Bank of Ghana. [Email: jasiama@bog.gov.gh])

  • Peter Quartey

    (Institute for Statistical Social and Economic Research, University of Ghana, Legon –Accra, Ghana. [Email: pquartey@isser.ug.edu.gh])

Abstract

The recent literature on aid effectiveness suggests the presence of non-linear effects as well as other country-specific effects in the aid-growth relationship, which may explain the different findings in the empirical literature. We argue that even after correcting for the above, the focus must be on welfare effects of aid in recipient countries since other contemporaneous effects might be involved, that may not be captured in a traditional analysis of the aid-growth relationship. We present some new and exclusive evidence on the effect of aid on indicators of welfare in Sub-Saharan Africa, a region that is said to be the least probable to achieve the Millennium Development Goals (MDGs). Our findings suggest that aggregate bilateral aid does not show a significant effect on the human development indicators and other welfare variables. However, disaggregated aid in the form of sector specific and programme aid do show a significant effect on the HDIs. The article proposes that aid is scaled up but targeted at areas where these are most effective. Moreover, other innovative ways of aid delivery apart from the traditional project and programme assistance need to be considered.

Suggested Citation

  • Johnson P. Asiama & Peter Quartey, 2009. "Foreign Aid and the Human Development Indicators in Sub-Saharan Africa," Journal of Developing Societies, , vol. 25(1), pages 57-83, January.
    • Handle: RePEc:sae:jodeso:v:25:y:2009:i:1:p:57-83
    DOI: 10.1177/0169796X0902500103
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0169796X0902500103
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0169796X0902500103?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Weisskopf, Thomas E, 1972. "An Econometric Test of Alternative Constraints on the Growth of Underdeveloped Countries," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 67-78, February.
    2. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398, April.
    3. Collier, Paul & Dollar, David, 2001. "Can the World Cut Poverty in Half? How Policy Reform and Effective Aid Can Meet International Development Goals," World Development, Elsevier, vol. 29(11), pages 1787-1802, November.
    4. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    5. P. Guillaumont & L. Chauvet, 2001. "Aid and Performance: A Reassessment," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 66-92.
    6. 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.
    7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    8. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    9. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    10. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    11. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    12. Paul Mosley & John Hudson & Arjan Verschoor, 2004. "Aid, Poverty Reduction and the 'New Conditionality'," Economic Journal, Royal Economic Society, vol. 114(496), pages 217-243, June.
    13. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
    14. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    15. Newlyn, Walter T, 1973. "The Effect of Aid and Other Resource Transfers on Savings and Growth in Less-Developed Countries: A Comment," Economic Journal, Royal Economic Society, vol. 83(331), pages 867-869, September.
    16. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    17. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, University Library of Munich, Germany.
    18. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    19. Stiglitz, Joseph E, 1999. "The World Bank at the Millennium," Economic Journal, Royal Economic Society, vol. 109(459), pages 577-597, November.
    20. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    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. Asongu, Simplice & Nwachukwu, Jacinta, 2015. "Foreign aid volatility and lifelong learning: demand-side empirics to a textual literature," MPRA Paper 67853, University Library of Munich, Germany.
    2. Simplice A. ASONGU & Jacinta NWACHUKWU & Nicholas BIEKPE, 2019. "Foreign Aid, Terrorism And Growth: Conditional Evidence From Quantile Regression," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(3), pages 457-486, September.
    3. Simplice A. Asongu & Uchenna R. Efobi & Ibukun Beecroft, 2021. "Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy," Forum for Social Economics, Taylor & Francis Journals, vol. 50(4), pages 432-456, October.
    4. Asongu, Simplice & Efobi, Uchenna & Beecroft, Ibukun, 2015. "FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries," EconStor Preprints 114569, ZBW - Leibniz Information Centre for Economics.
    5. Simplice A. Asongu & Joseph I. Uduji & Elda N. Okolo-Obasi, 2020. "Foreign aid volatility and lifelong learning," International Journal of Education Economics and Development, Inderscience Enterprises Ltd, vol. 11(4), pages 370-406.
    6. Sakiru Oladele Akinbode & Tobi Michael Bolarinwa, 2020. "Effect of Foreign Aid on Human Development in Sub-Saharan Africa:A System GMM Approach," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 18(1), pages 19-38.
    7. Nada Karaman Aksentijević & Zoran Ježić & Petra Adelajda Zaninović, 2021. "The Effects of Information and Communication Technology (ICT) Use on Human Development—A Macroeconomic Approach," Economies, MDPI, vol. 9(3), pages 1-12, September.
    8. Kar, Ashim Kumar, 2016. "Aid and Human Development: Is There A Role for Good Policy Environment?," MPRA Paper 95433, University Library of Munich, Germany, revised 2018.
    9. Ahmad Saad Gillani & Durdana Qaiser Gillani, 2023. "Sector Specific Aid Inflow, Institutional Quality and Human Development in Selected Developing Countries," Journal of Economic Impact, Science Impact Publishers, vol. 5(1), pages 64-68.

    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. Boriana Yontcheva & Mrs. Nadia Masud, 2005. "Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid," IMF Working Papers 2005/100, International Monetary Fund.
    2. Juergen Bitzer & Erkan Goeren, 2018. "Foreign Aid and Subnational Development: A Grid Cell Analysis," Working Papers V-407-18, University of Oldenburg, Department of Economics, revised Mar 2018.
    3. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    4. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    5. Mark McGillivray, 2006. "Aid Allocation and Fragile States," WIDER Working Paper Series DP2006-01, World Institute for Development Economic Research (UNU-WIDER).
    6. Lessmann, Christian & Markwardt, Gunther, 2012. "Aid, Growth and Devolution," World Development, Elsevier, vol. 40(9), pages 1723-1749.
    7. 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.
    8. Strand, Jon, 2009. ""Revenue management"effects related to financial flows generated by climate policy," Policy Research Working Paper Series 5053, The World Bank.
    9. Angeles, Luis & Neanidis, Kyriakos C., 2009. "Aid effectiveness: the role of the local elite," Journal of Development Economics, Elsevier, vol. 90(1), pages 120-134, September.
    10. David Roodman, 2007. "The Anarchy of Numbers: Aid, Development, and Cross-Country Empirics," The World Bank Economic Review, World Bank, vol. 21(2), pages 255-277, May.
    11. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
    12. Derek Headey, 2005. "Foreign Aid and Foreign Policy: How donors undermine the effectiveness of overseas development assistance," CEPA Working Papers Series WP052005, School of Economics, University of Queensland, Australia.
    13. Almuth Scholl, 2009. "Aid Effectiveness and Limited Enforceable Conditionality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 377-391, April.
    14. Tarp, Finn, 2006. "Aid and Development," MPRA Paper 13171, University Library of Munich, Germany.
    15. Mark McGillivray & Simon Feeny, 2008. "Aid and Growth in Fragile States," WIDER Working Paper Series RP2008-03, World Institute for Development Economic Research (UNU-WIDER).
    16. Ralf Hepp, 2005. "Health Expenditures Under the HIPC Debt Initiative," International Finance 0510005, University Library of Munich, Germany.
    17. Mark McGillivray & Simon Feeny & Niels Hermes & Robert Lensink, 2005. "It Works; It Doesn't; It Can, But that Depends...: 50 Years of Controversy Over the Macroeconomic Impact of Development Aid," WIDER Working Paper Series RP2005-54, World Institute for Development Economic Research (UNU-WIDER).
    18. Mark McGillivray & Simon Feeny & Niels Hermes & Robert Lensink, 2006. "Controversies over the impact of development aid: it works; it doesn't; it can, but that depends …," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(7), pages 1031-1050.
    19. Coviello, Decio & Islam, Roumeen, 2006. "Does aid help improve economic institutions ?," Policy Research Working Paper Series 3990, The World Bank.
    20. 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.

    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:sae:jodeso:v:25:y:2009:i:1:p:57-83. 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: SAGE Publications (email available below). General contact details of provider: .

    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.