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Foreign Aid and Mobilization of Growth Factors in Sub-Saharan Africa

  • Yogo, Thierry Urbain
  • Mallaye, Douzounet

This study addresses the macroeconomic effect of foreign aid on the factors of growth. Specifically, we examine the effects of foreign aid on capital investment (human capital, physical capital) in sub-Saharan Africa. Our methodological approach evaluates the effect of disaggregate aid (aid for infrastructure and aid for education) on capital investment. To test our postulate, we make use of panel data of 37 sub-Saharan African states over the period 2000-10. The results of the regressions show that foreign aid positively and significantly affected the physical capital accumulation in the countries under review. The effect of aid for infrastructure is less important in post-conflict environments than in stable environments. Concerning the impacts of aid on human capital, we find that aid enhances enrolment in primary education. We also note that there is no statistical difference between stable countries and post-conflict countries in terms of the effectiveness of aid for education.

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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper WP2013/103.

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Length: 18
Date of creation: 2013
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Handle: RePEc:unu:wpaper:wp2013-103
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  1. Dollar, David & Easterly, William, 1999. "The Search for the Key: Aid, Investment and Policies in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(4), pages 546-77, December.
  2. Lensink, Robert & Morrissey, Oliver, 1999. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," CDS Research Reports 199906, University of Groningen, Centre for Development Studies (CDS).
  3. d’Aiglepierre, Rohen & Wagner, Laurent, 2013. "Aid and Universal Primary Education," Economics of Education Review, Elsevier, vol. 37(C), pages 95-112.
  4. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  5. Riddell, Abby Rubin, 2012. "The Effectiveness of Foreign Aid to Education : What Can Be Learned?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Elizabeth Asiedu & Boaz Nandwa, 2007. "On the Impact of Foreign Aid in Education on Growth: How Relevant is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients?," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200701, University of Kansas, Department of Economics.
  7. Levy, Victor, 1988. "Aid and growth in Sub-Saharan Africa: The recent experience," European Economic Review, Elsevier, vol. 32(9), pages 1777-1795, November.
  8. Gomanee, Karuna & Girma, Sourafel & Morrissey, Oliver, 2005. "Aid and Growth in Sub-Saharan Africa: Accounting for Transmission Mechanisms," Working Paper Series RP2005/60, World Institute for Development Economic Research (UNU-WIDER).
  9. Hansen, Henrik & Tarp, Finn, 1999. "Aid Effectiveness Disputed," MPRA Paper 62290, University Library of Munich, Germany.
  10. William Easterly, 2007. "Was Development Assistance a Mistake?," American Economic Review, American Economic Association, vol. 97(2), pages 328-332, May.
  11. repec:unu:wpaper:wp2012-75 is not listed on IDEAS
  12. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  13. Kwabena Gyimah-Brempong & Jeffrey Racine, 2010. "Aid and investment in LDCs: A robust approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(2), pages 319-349.
  14. Felix K. Rioja, 2003. "The Penalties of Inefficient Infrastructure," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 127-137, February.
  15. repec:dgr:rugcds:199906 is not listed on IDEAS
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