Aid, institutions and economic growth in sub‐Saharan Africa: Heterogeneous donors and heterogeneous responses

Wako, Hassen Abda

doi:10.1111/rode.12319

Cited by 36 publications

(20 citation statements)

References 83 publications

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“…This method represents a special case of analysing both short-run and long-run effects of parameter linking the dependent variable and the dynamic regressors; and the error correction model where the coefficient in the error correction term depicts the speed of adjustment. The long-run coefficients (or equations) are of primary interest since these are the ones considered with greater relevance in growth studies (See Tait et al 2016;Wako, 2018;Chavula, 2016;Alimi, 2018;Iheonu et al 2017). The results show that dynamic stability exists as the parameter estimate of the error correction terms are negative and significant thus, indicating that long-run effects of aid grants on inclusive growth exist.…”

Section: Resultsmentioning

confidence: 99%

Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018

Asongu

Ezeaku

2020

SSRN Journal

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This study investigates the effects of aid grants on inclusive growth in 37 Sub-Saharan African countries for the period 1984-2018. Grant aid is decomposed into aid grants and technical cooperation grants. Two inclusive growth indicators are used namely: gross domestic product (GDP) per capita growth and unemployment rate. The dynamic panel autoregressive distributed lag (ARDL) approach which is employed comprises three different estimators; the pooled mean group (PMG), mean group (MG), and dynamic fixed effect (DFE). The Hausman diagnostics were used to assess the efficiency and consistency of the estimators. Based on the PMG estimator, our findings show that aid grants and technical cooperation grants exert a positive influence on GDP per capita growth in the long-run. However, while the observed influence of aid grants is found to be significant, technical cooperation grants display insignificant effects. In the short run, however, the PMG estimates show that aid grants and technical cooperation grants have negative and insignificant effects on GDP per capita growth. On the other hand, results based the DFE estimators reveal that neither of the aid grants has influenced the unemployment rate positively in the short-run. However, whereas aid grants contribute significantly to the reduction of the unemployment rate in the long run, technical cooperation grants do not. This study complements the attendant literature by assessing how aid grants versus technical cooperation grants affect inclusive growth. The findings are relevant to international policy coordination for the attainment of sustainable development goals.

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Section: Resultsmentioning

confidence: 99%

Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018

Asongu

Ezeaku

2020

SSRN Journal

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“…One may be concerned that the proposed negative relationship is due to China selectively providing assistance to countries already with weak institutions. However, Dreher and Fuchs (2015) and Wako (2018) find that China's aid allocation is independent of recipients' institutional quality. In the analyses, we also utilize instrumental strategies to determine the causal direction.…”

Section: Horizontal Accountabilitymentioning

confidence: 97%

“…Nevertheless, the claims find mixed support, and little cross-sectional quantitative evidence has been provided (Dreher et al 2018). Some studies express concerns that Chinese aid is more likely to be subject to capture and undermine governance (Tull 2006;Wako 2018), while some find no evidence supporting this negative association (Bader and Daxecker 2015;Bräutigam 2009). Focusing on one and several African countries, Brazys, Elkink and Kelly (2017) and Isaksson and Kotsadam (2018), respectively, find that Chinese projects are associated with increased perceptions of local-level corruption.…”

Section: Foreign Aid and Political Institutionsmentioning

confidence: 99%

The Effects of China's Development Projects on Political Accountability

Ping

Wang

Chang

2020

Brit. J. Polit. Sci.

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The literature on the relationship between foreign aid and institutions has found that the effects of aid vary across different donor characteristics and delivery mechanisms. This article focuses on China's resource-related development projects, which have been considered controversial due to the relative lack of conditionality. By distinguishing between vertical and horizontal dimensions of political accountability, the study finds that China's resource-related projects are particularly detrimental to the accountability of recipient countries' horizontal (legislative and judicial) institutions. These projects are often delivered to resource-rich countries, in the form of packaging access to resources and infrastructure construction, to improve China's own energy access. Local officials may be tempted to weaken horizontal institutions so that the projects can be implemented quickly. Nevertheless, these projects have little effect on vertical accountability, as China has less intention and capacity to fundamentally restrain electoral competition in recipient countries.

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“…However, considerably fewer studies have considered how Chinese finance is impacting other development actors or socio-economic developments in recipient countries. Wako (2017) finds that Chinese finance has a greater impact on economic growth than that of traditional donors, but that it has a negative institutional effect. Addressing concerns that rising Chinese debt may unbalance fiscal policies in recipient countries, Kilama (2015) finds no evidence of fiscal "disaster" linked to Chinese involvement.…”

Section: Existing Literature and Theoretical Underpinningsmentioning

confidence: 99%

China in Africa: Competition for traditional development finance institutions?

Humphrey

Michaelowa

2019

World Development

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Official development finance from China has risen tremendously in the past two decades across the globe, including in the world's poorest continent, Africa. How has this sudden increase in development resources affected the two major multilateral development banks (MDBs) in the region, the World Bank and the African Development Bank (AfDB)? One might expect that the MDBs-often described as tools to exert the influence of wealthy western countries-might compete with China to maintain their relevance and influence in Africa. This study undertakes a combination of statistical tests and in-depth interviews with government officials in three recipient countries to see if this is the case, both in terms of overall finance levels as well as in the sectoral distribution of projects. The results indicate that total MDB finance levels by country change little over time regardless of Chinese activity. The same is true for funding levels of traditional bilateral donors. The sectoral allocation of concessional lending does not show any responsiveness either. In contrast, shifts in funding levels overall and in sector allocation can be observed for non-concessional countries; the latter, however, represent only a small minority among the recipients of Chinese finance. Overall, the study suggests that while China's role in African development finance is indeed substantial and growing, it has not had the "game changing" impact on traditional development finance as popular perception might lead one to believe. Things may change, however, once more recipient countries develop economically and move into the non-concessional category.

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Aid, institutions and economic growth in sub‐Saharan Africa: Heterogeneous donors and heterogeneous responses

Cited by 36 publications

References 83 publications

Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018

Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018

The Effects of China's Development Projects on Political Accountability

China in Africa: Competition for traditional development finance institutions?

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