Foreign Aid and Economic Growth in West Africa: Examining the Roles of Institutions

Sikiru Babalola and Waliu Shittu

International Economic Journal, 2020, vol. 34, issue 3, 534-552

Abstract: This study examines the roles of institutions on the relationship between foreign aid and economic growth in the 16 West African countries. Relying on panel data obtained from the World Bank’s world development and governance indicators, from 1996 to 2017, the study employs the autoregressive distributed lag technique in investigating the relationship. The empirical findings depict that foreign aid exerts a neutral effect on economic growth; the effect turns negative when the institutional variable is incorporated into the analysis. Again, the interaction effect of foreign aid and institution on economic growth is such that it reduces the negative effect of foreign aid on economic growth. The other factors of growth included are trade openness and government size, whose effects are positive and largely negative on the growth of the West African region, respectively. A significant policy implication from these findings is that the efforts of governments of the region should be directed towards building formidable economic, social and political institutions. This would not only reduce the negative impact of aid on growth but would also promote the competitiveness of the countries for private domestic and foreign capital; thus, reducing reliance on foreign aid.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://hdl.handle.net/10.1080/10168737.2020.1780292 (text/html)
Access to full text is restricted to subscribers.

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:taf:intecj:v:34:y:2020:i:3:p:534-552

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RIEJ20

DOI: 10.1080/10168737.2020.1780292

Access Statistics for this article

International Economic Journal is currently edited by Jaymin Lee Editor

More articles in International Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().