Aid Flows

Cassimon, Danny; Essers, Dennis; Renard, Robrecht; Verbeke, Karel

doi:10.1016/b978-0-12-397874-5.00031-2

Cited by 4 publications

(4 citation statements)

References 29 publications

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“…This development reflected mainly the reduction of the external debt granted to Rwanda by the international community through the HIPC and MDRI debt relief initiatives. Indeed, the total external debt relief provided to Rwanda under the two initiatives amounted to US$ 1.4 billion for HIPC in 2005 and US$516 million for MDRI in 2006 (Cassimon, Essers and Verbeke, 2016) and reduced the relative weight of the external public debt from 79% to 15% of GDP between 2004 and 2006; as a consequence, the total public debt of Rwanda also declined from 91% to 24% of GDP in the same period.…”

Section: Rwanda's Public Debt Profilementioning

confidence: 99%

Nonlinear Effects of Public Debt on Economic Growth: The Case of Rwanda

2023

JESD

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The purpose of this paper is to investigate the nonlinear impact of public debt on economic growth and establish the long and short run relationship between economic growth and its determinants in Rwanda. To this end, a quadratic polynomial function in debt combined with the autoregressive distributed lag (ARDL) bounds testing approach to co-integration have been employed for econometric analysis using time series data covering the period 1970-2020. Following previous empirical studies, this research assumed that at lower level, public debt may be growth-enhancing, while at higher level, it is detrimental to growth. Therefore, this study attempted to assess whether in the case of Rwanda, there exists a threshold level or a turning point above which the impact of public debt on economic growth shifts from positive to negative. The empirical results of this study strongly suggest the presence of an inverted U-shaped or concave relationship between public debt and economic growth in Rwanda. The turning point above which additional public debt becomes harmful to growth has been evaluated at a public debt-to-GDP ratio equal to 53.6%. The estimated threshold is relatively higher than the public debt convergence policy benchmark of 50% of GDP adopted in Rwanda within the East African Community. This result would be useful for policy makers in the design of a well-informed macroeconomic and public debt management strategy.

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Section: Rwanda's Public Debt Profilementioning

confidence: 99%

Nonlinear Effects of Public Debt on Economic Growth: The Case of Rwanda

2023

JESD

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“…Theoretically, there are several channels that aid can either foster or hinder FDI inflows (Asiedu et al, 2009;Cassimon et al, 2013;Donaubauer et al, 2016;Garriga & Phillips, 2014;Harms & Lutz, 2006;Kimura & Todo, 2010;Selaya & Sunesen, 2012). On the positive effects of aid, foreign aid makes the recipient country more attractive to FDI when: (1) it increases the stock of economic and social infrastructures through its public infrastructure financing leading to a further increase in the marginal product of private capital (MPK), the so-called infrastructure effects; (2) it improves recipient country's ability to finance the sustained outflows of profit repatriations from FDI;…”

Section: Literature Reviewmentioning

confidence: 99%

“…On the contrary, foreign aid also can substitute or crowd out private foreign capital flows. First, foreign aid can foster rent-seeking activities by incentivising private (and public) agents to compete for rents from inflows of aid hence displacing talents and efforts from productive activities, e.g., R&D and training (Cassimon et al, 2013). Consequently, this aid induced unproductive rent-seeking makes the aid recipient country less attractive to the FDI inflow (Harms & Lutz, 2006).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Theoretically, foreign aid can have positive or negative effects on FDI, with the former working through infrastructure, finance, signalling and vanguard effects (Donaubauer et al, 2016;Garriga & Phillips, 2014;Kimura & Todo, 2010;Selaya & Sunesen, 2012) while the later operates via rent-seeking and Dutch disease effects (Arellano et al, 2009;Harms & Lutz, 2006). Due to these theoretical ambiguities, whether foreign aid attracts or deters FDI becomes an empirical question (Cassimon et al, 2013). So far, the emerging empirical literature on aid-FDI nexus has also been recorded with highly mixed findings with positive, negative and null results (Donaubauer, 2014;Donaubauer et al, 2016;Harms & Lutz, 2006;Janský, 2012;Kimura & Todo, 2010;Lee & Ries, 2016;Liao et al, 2020;Selaya & Sunesen, 2012;Tanaka & Tsubota, 2013;Yasin, 2005).…”

Section: Introductionmentioning

confidence: 99%

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Does Foreign Aid Promote Foreign Direct Investment in Post-conflict Cambodia?

Slesman

2023

MJES

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Post-conflict Cambodia has experienced a significant increase in foreign aid and foreign direct investment (FDI) inflows since the early 1990s. This paper investigates whether (aggregate, donor-specific, and sectoral-based disaggregate) foreign aid has any short- and long-run crowding-in effects on FDI inflows using autoregressive distributed lag (ARDL) bound test for cointegration over the 1992–2018 post-conflict period. Robust findings reveal that aggregate development aid and ‘donor-specific’ aid from Australia and United Nations Development Programme (UNDP) crowding-in FDI in the long run. Donor-specific aid from the EU, the US, Japan and France, and sectoralbased ‘governance aid’ and ‘other aid’ either have non-robust positive or no significant long-run effects on FDI. In the short run, however, only EU-aid and other-aid have crowding-in effects on FDI. Foreign development aid can catalyse FDI inflows in postconflict Cambodia, especially in the long run.

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