L’aide publique au développement face aux chocs externes: quel rôle pour la résilience économique des pays de l’UEMOA ?

Official Development Assistance and External Shocks: What Role for the Economic Resilience of WAEMU Countries?

Seydou Sow

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the impact of Official Development Assistance (ODA) on economic resilience in WAEMU countries, aiming to identify critical dependency thresholds beyond which aid effects become significantly positive or negative, while analyzing specific channels through which ODA influences growth and shock absorption capacity. The methodology employs two complementary approaches applied to a panel of eight WAEMU countries over the period 2000-2022: the Panel Smooth Transition Regression (PSTR) model to capture the non-linear relationship between ODA and economic growth, and the Fully Modified Ordinary Least Squares (FMOLS) approach to identify transmission channels while correcting for endogeneity bias. Results confirm the existence of a robust non-linear relationship with convergent critical thresholds: 7.86% of GDP using the PSTR model and an optimal range of 8-10% of GDP with the FMOLS approach, below which aid effects are negative and beyond which diminishing returns appear. Channel analysis reveals that governance constitutes the most powerful determinant of economic resilience with an impact four times greater than investment and eight times greater than direct ODA, while crises reduce growth by 0.68 percentage points and increase inflation by over 3 points, confirming the region's strong structural vulnerability. These findings imply that aid effectiveness fundamentally depends on respecting optimal thresholds and prioritizing institutional strengthening, requiring a redesign of allocation strategies that favor governance and capacity-building programs, while maintaining aid flows within the critical range of 8-10% of GDP and diversifying financing sources to reduce external dependence and strengthen resilience against future shocks.

Keywords: Official Development Assistance; Economic Resilience; WAEMU; Non-linear Effects; Institutional Quality; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 F35 O11 O55 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-fdg
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