Does Aid for Innovation Foster Innovation? Empirical Evidence From Sub-Saharan Africa

Abstract

The flow of official development assistance (ODA) to support research and training (TR) in developing countries has raised questions within the academic and policy circles about whether this ODA intervention is effective. In addressing this question, this paper examines empirically, whether ODA channelled to research in Sub-Saharan Africa (SSA) to promote innovation and technology advancement in the sub-region leads to innovation. The study includes 32 countries in the SSA sub-region and the datasets deployed for the study were obtained from the World Bank Enterprise Survey (WBES), the Organisation for Economic Co-operation and Development (OECD) aid database, and the World Bank online database. Using firm-level data while controlling for country-specific characteristics and the fixed effect estimator, the results show that countries in SSA have the potential to introduce new products and services or significantly improve processes in their product or service if governments in the sub-region or their development partners increase their subventions to support research and TR.