Economics

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Browsing Economics by Author "Abda, Hassen"

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    Effectiveness of Foreign Aid in Sub-Saharan Africa: A Less Aggregated Analysis
    (Addis Ababa University, 2008-06) Abda, Hassen; Estiphanos, Girma (PhD)
    Inspired by the contradicting findings of studies on aid effectiveness and the recently emerging dissatisfaction of scholars with the methodologies of earlier works, this study has taken up the examination of the effectiveness of bilateral and multilateral aids on economic growth. To this end, the estimation technique of Difference-GMM – along with other techniques for comparison – has been applied to a panel data from 42 Sub-Saharan African countries for the years 1980 through 2007. For the data at hand, no evidence is found for the – conditional or unconditional – effectiveness of both kinds of aid. This result is robust to the alternatives of using the augmented Solow type growth models and the ‘modern’ models which emphasize the roles of institutional, policy and geographical factors at explaining growth differences. Bilateral aid on its own or in an interaction with policy is ineffective at enhancing economic growth, regardless of whether it is measured relative to the recipients GDP or in per capita terms. The same holds for multilateral aid. The concluding point of this study which says that both bilateral and multilateral aids are ineffective at influencing economic growth is confined to the data at hand and thus gives no evidence about the effectiveness of the recently emerging aid modalities. Research on aid effectiveness remains to be extended along high level of disaggregating aid and testing for the effectiveness of the new approaches of delivering aid which are argued to possess elements of better government accountability, better transparency and better recipient-ownership.