Response of Inclusive Growth to Development Aid in Africa and the Role of ICT Diffusion

Suleiman Mamman

Journal of Applied Economic Research, 2023, vol. 22, issue 4, 770-788

Abstract: Over the years, some regions of Africa have witnessed stable economic growth, which could not be considered pro-poor or inclusive given the region’s high rate of poverty and income inequality. Development aid flow, on the other hand, has been contended to be a pro-poor strategy, which could play a key role in the drive towards the achievement of sustainable, inclusive growth in Africa. Thus, the purpose of this paper is to evaluate the role of development aid, which has been argued to be welfare-enhancing, especially in developing countries, taking into account digitalization. The research hypothesis is that development aid in the form of foreign aid and remittances promotes inclusive growth, especially in the face of digitalization in Africa. Premised on the inclusive growth-aid nexus, the study carried out panel data analysis using the common correlation effect technique for 50 African countries from 1996 to 2021. The main findings reveal that remittances have a welfare-enhancing effect through improving inclusive growth. Foreign aid, on the other hand, had a positive effect but was not significant, which was attributed to the weak institutional framework in the region. Digitalization was observed to have an adverse effect attributed to its high affordability. The theoretical contribution of the study is the incorporation of structural systems such as digitalization in the nexus between inclusive growth and development aid, which has been identified as a facilitator in the drive for inclusive growth. In terms of practical significance, the study highlights the need for digital reforms and investment in this sector as well as the need to address the institutional gap to mitigate the inefficiencies of development aid performance.

Keywords: development aid; foreign aid; remittances; poverty; income inequality; inclusive growth; digitalization; institutional quality; Africa; heterogenous panel model. (search for similar items in EconPapers)
JEL-codes: F24 F35 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journalaer.ru//fileadmin/user_upload/site_15934/2023/01_Mamman.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnjaer:v:22:y:2023:i:4:p:770-788

DOI: 10.15826/vestnik.2023.22.4.031

Access Statistics for this article

Journal of Applied Economic Research is currently edited by Igor Mayburov

More articles in Journal of Applied Economic Research from Graduate School of Economics and Management, Ural Federal University Contact information at EDIRC.
Bibliographic data for series maintained by Natalia Starodubets ().