Aid, Export Promotion and the Real Exchange Rate: An African Dilemma?

Sweder van Wijnbergen

No 88, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Africa, while a major aid recipient, has had disappointing export performance. This paper argues for a causal link: aid, by being partially spent on non-traded goods, leads to real appreciation and reduced export competitiveness. I demonstrate the importance of this effect by presenting econometric evidence on the positive relation between aid flows and real exchange rate appreciation and increases in the real wage in the traded-goods sector. Policy implications are discussed.

Keywords: Africa; Development Aid; Export Performance; Real Exchange Rate Appreciation; Traded and Non-Traded Goods (search for similar items in EconPapers)
Date: 1985-12
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Citations: View citations in EconPapers (29)

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