Working Paper 179 - Heterogeneity of the Effects of Aid on Economic Growth in Sub-Saharan: Comparative Evidence from Stable and Post-Conflict Countries

Douzounet Mallaye and Thierry Yogo ()

Working Paper Series from African Development Bank

Abstract: This study provides evidence of the effectiveness of aid through the use of a sample of 34 sub-Saharan African countries over the period 1990-2010. After considering the endogeneity of aid, the results of the estimation reveal that aid has a positive effect on growth only when the estimation is controlled for governance. The comparative analysis shows in turn that governance and education are the main channels through which aid is transmitted to growth in a stable environment. In a post-conflict environment, on the other hand, aid affects growth via investment in public capital (infrastructure). Finally, the Oaxaca-Blinder decomposition approach shows that the difference in terms of amounts of aid received does not explain the differences in growth observed between stable countries and countries in post-conflict situations. Based on those results, the economic policy implications are discussed in the conclusion.

Date: 2013-09-22
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Persistent link: https://EconPapers.repec.org/RePEc:adb:adbwps:982

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