Aid Fragmentation and Aid Effectiveness in Sub-Saharan Africa

Bernardin Senadza, Richmond Addison and Albert Duodu ()
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Albert Duodu: University of Ghana, Ghana

Review of Development Finance Journal, 2024, vol. 14, issue 1, 40-56

Abstract: This paper examines the effect of aid fragmentation on the aid-growth nexus in Sub-Saharan Africa from 1990-2017. Aid fragmentation is measured by both the concentration index (Herfindahl index and ratio of contribution by largest three donors) and donor counts (total number of donors and number of small donors). We find a significant negative effect of aid fragmentation on the effectiveness of aid to stimulate economic growth based on the concentration index. We did not find any significant relationship between aid fragmentation and aid effectiveness when we employed the instrumental variable approach. The results point to a positive impact of the economic policy environment in the recipient countries on economic growth. The policy environment and the level of aid fragmentation in the recipient countries are found to have a combined positive moderating effect on the aid-growth nexus.

Keywords: Aid effectiveness; Aid fragmentation; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F35 O11 O40 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ3:v:14:y:2024:i:1:p:40-56

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