Ageba, Gebrehiwot (PhD)Tefera, Wondwosen2018-12-072023-11-192018-12-072023-11-192003-07http://etd.aau.edu.et/handle/12345678/15001The objective of this study is to assess the relationship between aid, policies and economic growth in Ethiopia for the period 1962/63 to 2001/02. The analysis is conducted using the Johansen Maximum Likelihood Procedure. The main findings of the empirical investigation are: Foreign aid has a significant positive contribution to investment, whereas uncertainty of aid flow (as a result of aid volatility) significantly and negatively affects the capital formation activity. The effect of foreign aid on economic growth appeared negative but insignificant. Aid interacted policy term, on the other hand, produced significantly positive result. The result further points out that good economic policies increase the level of foreign aid that can be productively consumed. The Error Correction Model (ECM) conclude that foreign aid is insignificant in the short run. Furthermore, the causality test shows that the causality runs from policies to foreign aid while the converse does not hold.enGrowth Relationship in EthiopiaThesis