Aid and Growth in Sub-Saharan Africa: Accounting for Transmission Mechanisms

Karuna Gomanee, Sourafel Girma and Oliver Morrissey

No RP2005-60, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper is a contribution to the literature on aid and growth. Despite an extensive empirical literature in this area, existing studies have not addressed directly the mechanisms via which aid should affect growth. We identify investment as the most significant transmission mechanism, and also consider effects through financing imports and government consumption spending. With the use of residual generated regressors, we achieve a measure of the total effect of aid on growth, accounting for the effect via investment.

Keywords: Economic assistance and foreign aid; Econometric models (Economic development); Public expenditures; Investments (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (72)

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