IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/55564.html
   My bibliography  Save this paper

Foreign Aid and African Exporters: Help or Harm?

Author

Listed:
  • Ojeaga, Paul

Abstract

Export growth is pursued by many developing countries as a path to economic prosperity. Consistent with this goal, many foreign donors have attempted to use aid to promote African exporters. The relationship between foreign aid and exports is a complex one as aid comes from different sources and has varied destinations in the recipient country. In this paper, we utilize a panel data set of African countries from 1970-2008 to examine the impact of foreign aid on exports. The results find that aid designated for sectors such as infrastructure and education have a positive impact on exports while those going to agriculture and industry do not. Results also show that both multilateral and bilateral aid has a positive impact on exports. Also, less concessionary official development assistance does at least as well, if not better, in boosting exports as does more grant-based effective development assistance. There is significant evidence that natural resources and foreign aid are being viewed by donors, and functioning, as complements. Evidence finds that sound economic policy by the recipient to be an important factor in export growth and that better policy can act as a substitute for foreign aid. These results suggest the important of properly directing aid to the right sectors and promoting sound economic policies by recipient countries.

Suggested Citation

  • Ojeaga, Paul, 2012. "Foreign Aid and African Exporters: Help or Harm?," MPRA Paper 55564, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55564
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/55564/1/MPRA_paper_55564.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chang, Charles C. & Fernández-Arias, Eduardo & Servén, Luis, 1998. "Measuring Aid Flows: A New Approach," IDB Publications (Working Papers) 1297, Inter-American Development Bank.
    2. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014, December.
    3. Svensson, Jakob, 2000. "When is foreign aid policy credible? Aid dependence and conditionality," Journal of Development Economics, Elsevier, vol. 61(1), pages 61-84, February.
    4. Clemens, Michael A. & Kenny, Charles J. & Moss, Todd J., 2007. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," World Development, Elsevier, vol. 35(5), pages 735-751, May.
    5. Hristos Doucouliagos & Martin Paldam, 2007. "A meta-analysis of development aid allocation: The effects of income level and population size," Economics Working Papers 2007-15, Department of Economics and Business Economics, Aarhus University.
    6. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    7. Evan Osborne, 2002. "Rethinking Foreign Aid," Cato Journal, Cato Journal, Cato Institute, vol. 22(2), pages 297-316, Fall.
    8. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(6), pages 814-823, December.
    9. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    10. Jan Pettersson, 2007. "Foreign sectoral aid fungibility, growth and poverty reduction," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1074-1098.
    11. 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.
    12. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    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. Paul I. Ojeaga, 2016. "Do Specific Growth Drivers Exist for Firms? A Regional Analysis of Start-ups and Industrial Growth," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 4(1), pages 117-129, May.

    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. Ojeaga, Paul, 2012. "Does Foreign Aid Promote Trade? Evidence from Some Selected African Countries," MPRA Paper 55580, University Library of Munich, Germany.
    2. 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.
    3. Clemens, Michael A. & Kenny, Charles J. & Moss, Todd J., 2007. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," World Development, Elsevier, vol. 35(5), pages 735-751, May.
    4. Kilby, Christopher, 2005. "Aid and regulation," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 325-345, May.
    5. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers 44, Center for Global Development.
    6. 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.
    7. Lauren E. Lopez, 2015. "Corruption And International Aid Allocation: A Complex Dance," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 35-61, March.
    8. Czarnitzki, Dirk & Doherr, Thorsten & Hussinger, Katrin & Schliessler, Paula & Toole, Andrew A., 2016. "Knowledge Creates Markets: The influence of entrepreneurial support and patent rights on academic entrepreneurship," European Economic Review, Elsevier, vol. 86(C), pages 131-146.
    9. Stéphane Pallage & Michel A. Robe, 2001. "Foreign Aid and the Business Cycle," Review of International Economics, Wiley Blackwell, vol. 9(4), pages 641-672, November.
    10. Marco Manacorda & Andrea Tesei, 2020. "Liberation Technology: Mobile Phones and Political Mobilization in Africa," Econometrica, Econometric Society, vol. 88(2), pages 533-567, March.
    11. Robert K. Fleck & Christopher Kilby, 2006. "World Bank Independence: A Model and Statistical Analysis of US Influence," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 224-240, May.
    12. HEPP, Ralf, 2010. "CONSEQUENCES OF DEBT RELIEF INITIATIVES IN THE 1990s," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(1).
    13. 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.
    14. Sandy Dall'erba & Julie Le Gallo, 2008. "Regional convergence and the impact of European structural funds over 1989–1999: A spatial econometric analysis," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 219-244, June.
    15. Kilby, Christopher, 2005. "World Bank lending and regulation," Economic Systems, Elsevier, vol. 29(4), pages 384-407, December.
    16. Paul Mosley, 2011. "RETRACTED ARTICLE: Trust and conditionality; Or, can the World Bank ‘Leopard’ change its spots?," The Review of International Organizations, Springer, vol. 6(3), pages 483-483, September.
    17. Alok Kumar, 2017. "Foreign Aid, Incentives and Efficiency: Can Foreign Aid Lead to the Efficient Level of Investment?," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 678-697, August.
    18. Schober, Dominik, 2013. "Static vs. dynamic impacts of unbundling: Electricity markets in South America," ZEW Discussion Papers 13-033, ZEW - Leibniz Centre for European Economic Research.
    19. Oliver Morrissey, 2012. "Aid and Government Fiscal Behaviour: What Does the Evidence Say?," WIDER Working Paper Series wp-2012-001, World Institute for Development Economic Research (UNU-WIDER).
    20. Qayyum, Unbreen & Din, Musleh-ud & Haider, Adnan, 2014. "Foreign aid, external debt and governance," Economic Modelling, Elsevier, vol. 37(C), pages 41-52.

    More about this item

    Keywords

    Keywords: Foreign Aid; Exports; Natural Resources; Africa;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

    Statistics

    Access and download statistics

    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:pra:mprapa:55564. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.