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Can Aid Generate Growth in Africa?

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  • Bigsten, Arne

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

The paper discusses the impact of foreign aid on economic growth in Africa. After brief discussion about growth determinants it goes on to review the available evidence about the impact of aid on African economic growth. Evidence from both cross-country regressions and country studies is considered, and issues relating to economic policy, governance, ownership, and sustainability are identified as particularly important. Given those insights, some general conclusions are drawn as to what type of aid should be given. However, the main focus is on a discussion about how to structure the aid relationship so that it encourages good governance, which is deemed essential for long-term growth. Donors should delegate more responsibility to the recipients, while at the same time creating an incentive structure for good performance. This would include among other things a shift towards ex post conditionality and aid allocation according to performance. Given the improvements in the economic policy environment in Africa, the prospects for effective aid look more promising than they have for a long time.

Suggested Citation

  • Bigsten, Arne, 1998. "Can Aid Generate Growth in Africa?," Working Papers in Economics 3, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0003
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    References listed on IDEAS

    as
    1. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
    2. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    3. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    4. Dani Rodrik, 1989. "Credibility of Trade Reform — a Policy Maker's Guide," The World Economy, Wiley Blackwell, vol. 12(1), pages 1-16, March.
    5. Claessens, Stijn & Naude, David, 1993. "Recent estimates of capital flight," Policy Research Working Paper Series 1186, The World Bank.
    6. 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 616-641, September.
    7. repec:fth:oxesaf:97-2.1 is not listed on IDEAS
    8. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    9. Bigsten, Arne & Moene, Karl Ove, 1996. "Growth and Rent Dissipation: The Case of Kenya," Journal of African Economies, Centre for the Study of African Economies, vol. 5(2), pages 177-198, June.
    10. Christopher S. Adam & Stephen O'Connell, 1997. "Aid, taxation and development: analytical perspectives on aid effectiveness in sub-Saharan Africa," CSAE Working Paper Series 1997-05, Centre for the Study of African Economies, University of Oxford.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Aid; Growth; Africa;
    All these keywords.

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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