IDEAS home Printed from https://ideas.repec.org/p/uwa/wpaper/15-35.html
   My bibliography  Save this paper

Foreign Aid And Economic Growth In Sub-Saharan Africa

Author

Listed:
  • Lauren Tait

    (Business School, University of Western Australia)

  • Abu Siddique

    (Business School, University of Western Australia)

  • Ishita Chatterjee

    (Business School, University of Western Australia)

Abstract

Since the end of the Second World War, developing countries have been the recipient of significant amounts of foreign aid, provided mainly with the aim of easing poverty and promoting economic growth and development. Sub-Saharan Africa, a region of forty-eight countries with a combined population of over nine hundred million as of 2013, has consistently been one of the largest recipients of foreign aid. For example, in 2012, the region received a share of over twenty five per cent of total world aid. As such, the effectiveness of aid in Sub-Saharan Africa is of particular interest to researchers and both donor and recipient countries alike. The main objective of this study is to empirically examine the impact of foreign aid on this region over the period 1970 to 2012, through fixed effect panel data analysis. A sample of twenty-five Sub-Saharan African countries is considered in the study. The findings of the study indicate that aid has a significant positive long-term impact on per capita GDP growth over the period under consideration. This significant positive effect of aid is not subject to diminishing marginal returns, nor is conditional on the level of freedom in the country. Furthermore, upon sectoral decomposition of aid commitments, certain sectors are identified as having a more significant impact on growth over the sub-period 1995 to 2012. Aid designated for social infrastructure, in particular education and health, and general budget support has a positive, significant impact on growth. Given the shorter time frame, these results are not as robust as those for the 1970 to 2012 period, but nonetheless provide a unique insight into the effect of sector-earmarked aid on growth in Sub-Saharan Africa, as well as guidance for aid allocation policy-makers.

Suggested Citation

  • Lauren Tait & Abu Siddique & Ishita Chatterjee, 2015. "Foreign Aid And Economic Growth In Sub-Saharan Africa," Economics Discussion / Working Papers 15-35, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:15-35
    as

    Download full text from publisher

    File URL: https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2015/DP%2015.35_Siddique1.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Asongu, Simplice & Ezeaku, Hillary, 2020. "Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018," MPRA Paper 107528, University Library of Munich, Germany.
    2. Moheddine Younsi & Marwa Bechtini & Hasna Khemili, 2021. "The effects of foreign aid, foreign direct investment and domestic investment on economic growth in African countries: Nonlinearities and complementarities," African Development Review, African Development Bank, vol. 33(1), pages 55-66, March.
    3. Afolabi Tunde Ahmed & Imran Ur Rahman, 2020. "The Impact of FDI and Foreign Aid on the Economic Growth: Empirical Evidence from Sub-Saharan African Countries," International Journal of Science and Business, IJSAB International, vol. 4(6), pages 53-70.
    4. Nadeem Abdulmalik Abdulrahman Aljonaid & Fengming Qin & Zhaoyong Zhang, 2022. "The Heterogeneous Impact of Sectoral Foreign Aid Inflows on Sectoral Growth: SUR Evidence from Selected Sub-Saharan African and MENA Countries," JRFM, MDPI, vol. 15(3), pages 1-45, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:uwa:wpaper:15-35. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sam Tang (email available below). General contact details of provider: https://edirc.repec.org/data/deuwaau.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.