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Increasing foreign aid for inclusive human development in Africa

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  • Simplice Asongu

    () (Yaoundé/Cameroun)

  • Jacinta C. Nwachukwu

    () (Coventry University, UK)

Abstract

In the light of evidence that poverty has been decreasing in all regions of the World with the exception of Africa, where about 45 percent of countries in Sub-Saharan Africa did not achieve the Millennium Development Goal (MDG) extreme poverty target. Therefore, this study assesses whether increasing foreign aid improves inclusive human development. The investigation is on 53 African countries for the period 2005-2012. The empirical analysis is based on (i) the Generalised Method of Moments (GMM) to control for persistence in inclusive human development, simultaneity and time-invariant omitted variables and (ii) Instrumental Variable Tobit Regressions to control for simultaneity and the limited range in the dependent variable. The adopted foreign aid variables are: ‘humanitarian assistance’, ‘action on debt’ ‘aid for social infrastructure’, ‘aid to the productive sector’, ‘aid to the multi sector’, ‘aid for economic infrastructure’ and ‘programme assistance’. The following findings are established. From the GMM specifications, there are (i) synergy effects from ‘aid to the productive sector’ and a positive net effect from ‘programme assistance’ and (ii) negative net impacts from ‘aid to social infrastructure’ and human assistance, albeit with positive marginal effects. From Instrumental Variable Tobit regressions (i) there is a synergy effect from ‘aid for economic infrastructure’ and (ii) there are negative net impacts from ‘aid for social infrastructure’, ‘aid to the productive sector’ and human assistance, albeit with positive marginal effects. Policy implications are discussed.

Suggested Citation

  • Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Increasing foreign aid for inclusive human development in Africa," Working Papers of the African Governance and Development Institute. 17/020, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:17/020
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    Cited by:

    1. Ssozi, John & Asongu, Simplice & Amavilah, Voxi, 2018. "The Effectiveness of Development Aid for Agriculture in Sub-Saharan Africa," MPRA Paper 88530, University Library of Munich, Germany.
    2. Simplice Asongu & Vanessa Tchamyou & Ndemaze Asongu & Nina Tchamyou, 2017. "The Comparative African Economics of Inclusive Development and Military Expenditure in Fighting Terrorism," Journal of African Development, African Finance and Economic Association, vol. 19(2), pages 77-91.
    3. Ssozi, John & Asongu, Simplice & Amavilah, Voxi, 2017. "Is Aid for Agriculture Effective in Sub-Saharan Africa?," MPRA Paper 83073, University Library of Munich, Germany.

    More about this item

    Keywords

    Foreign Aid; Sustainable Development; Africa;

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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