Fostering Economic Development: Is External Finance Responsible for the Poor Economic Growth in Sub-Saharan Africa?

Michael Mitchell Omoruyi Ehizuelen () and Meibo Huang
Additional contact information
Michael Mitchell Omoruyi Ehizuelen: Institute of African Studies, Zhejiang Normal University, Jinhua, Zhejiang, 321004, China
Meibo Huang: Professor of Economics, School of Economics, Xiamen University, Xiamen, Fujian, China

Global Economy Journal, 2016, vol. 16, issue 2, 313-347

Abstract: On the question of whether external finance stimulates GDP growth, the profession offers inconclusive as well as frequent contradictory outcomes. While waiting for a robust consensus, this paper addressed directly the mechanisms through which external finance should influence economic growth. Investment was identify as the most significant transmission mechanism, and as well considers effects via funding regime consumption expenditure and import. By employing the residual generated repressors’, we accomplish a measure of the overall influence of external finance on economic growth, accounting for the influence through investment. Based on the pooled panel outcomes, a sample of twenty-five Sub-Saharan Africa economies were examine over the period of 1970–1997; the result indicates that there is a significant and positive effect of overseas assistance on economic growth, ceteris paribus. Based on average, each 1 % point upsurge in the aid/GNP ratio contributes one-quarter of 1 % point to the growth rate. Therefore, the poor economic growth in Africa should not be attributed to external finance ineffectiveness.

Keywords: aid; external finance; growth; investment; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F35 O40 O55 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1515/gej-2015-0033 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

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:bpj:glecon:v:16:y:2016:i:2:p:313-347:n:3

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/gej/html

DOI: 10.1515/gej-2015-0033

Access Statistics for this article

Global Economy Journal is currently edited by Jannett Highfill

More articles in Global Economy Journal from De Gruyter
Bibliographic data for series maintained by Peter Golla ().