The Devil is in the Details: On the Robust Determinants of Development Aid in G5 Sahel Countries

Nimonka Bayale and Brigitte Kanga Kouassi

Working Papers from African Economic Research Consortium

Abstract: This paper introduces model uncertainty into the empirical study on the determinants of development aid at the regional level. This is done by adopting a panel Bayesian model averaging approach applied to the data of G5 Sahel countries, spanning the period 19802018. Our results suggest that, among the regressors considered, those reflecting terrorist attacks, trade stakes including military expenditure, socio-economic prospects and institutional conditions tend to receive high posterior inclusion probabilities. The study explores the relationship between these regressors and foreign aid by employing the fully POLICY BRIEF The Devil is in the Details: On the Robust Determinants of Development Aid in G5 Sahel Countries Nimonka Bayale and Brigitte Kanga Kouassi October 2023 / No.810 2 Policy Brief No.810 modified ordinary least squares (FMOLS), the continuously updated fully modified (CUP-FM), the dynamic ordinary least squares (DOLS) long-run estimators, and the Dumitrescu and Hurlin (2012) panel causality test. The results highlight three concerns that may justify aid flows towards G5 Sahel countries: (a) peace and security considerations, (b) the economic interest of donors, and (c) recipient economic needs. The paper recommends that Sahel countries should strengthen international cooperation for security and peace, in compliance with goal 16 of the 2030 Agenda for Sustainable Development of the United Nations (UN) and goal 13 of the African Unions (AU) Agenda 2063.

Date: 2024-04-10
Note: African Economic Research Consortium
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