The impact of Foreign Aid on Economic Growth in Sub-Sahara Africa: The mediating role of Institutions

Elizabeth Adusei

MPRA Paper from University Library of Munich, Germany

Abstract: The study examines the impact of aid on economic growth in Sub-Saharan Africa and also investigates whether institutions mediate the absorptive capacity of aid in the region. The concept of foreign aid has been flagged as the solution to ending Africa’s poverty predicament by some scholars; as such Least Developing countries depend on it to finance their budget and embark on other developmental projects. The study observed that aid positively affect economic growth in the region. Thus it serves as a form of investment in the region, thereby increasing capital accumulation. However, the study also observed that institutional quality alone does not mediate the effectiveness of aid on economic growth in the region. Other factors including good fiscal policies, monetary policies, etc. need to be considered to increase the absorptive capacity of aid in the region.

Keywords: Keywords: Foreign aid; per capita income growth rate; Human capital index; labour force participation rate; Institutional quality. (search for similar items in EconPapers)
JEL-codes: F35 O1 (search for similar items in EconPapers)
Date: 2020-05-27
New Economics Papers: this item is included in nep-afr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:104561

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