Foreign Aid, Domestic Savings, And Economic Growth In South Asia

Basnet, Hem C.

doi:10.19030/iber.v12i11.8176

Cited by 20 publications

(20 citation statements)

References 16 publications

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“…Therefore, foreign aid has positive impacts only in those economies that have good fiscal, monetary and trade policies, Burnside and Dollar (2000), which means that good economic policy pre-requested for aid effectiveness, Murshed and Khanaum (2014). Basnet (2013) examined the role of foreign aid on savings and economic growth in South Asian countries by utilizing a simultaneous equation system. He found that foreign aid enhances economic growth in five South Asian countries and foreign aid adversely influences Business andEconomic Research ISSN 2162-4860 2016, Vol.…”

Section: Literature Reviewmentioning

confidence: 99%

Foreign Aid, Domestic Savings and Economic Growth in Selected MENA Countries

Sabra

Eltalla²

2016

BER

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<p class="ber"><span lang="EN-GB">Foreign aid can have either a positive or a negative impact on economic growth. The role of foreign aid in supporting growth by completing domestic savings has been a subject of substantial argument. In this study, we explore the role of foreign aid, trade openness, investment, domestic savings and economic growth in eight MENA countries (Morocco, Algeria, Egypt, Palestine, Syria, Jordan, Lebanon and Tunisia) for the period from 1977 to 2013. The estimation has been done using simultaneous equation model and dynamic panel data system analysis. A negative relationship is found between economic growth and foreign aid. The negative impact of foreign aid on economic growth could be due to presence of Dutch disease and bad policy environment. In addition, foreign aid seems to crowd out domestic savings rather than complementing it. The effects of trade openness and domestic investment on economic growth are significantly positive.</span></p>

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Section: Literature Reviewmentioning

confidence: 99%

Foreign Aid, Domestic Savings and Economic Growth in Selected MENA Countries

Sabra

Eltalla²

2016

BER

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“…The government expenditure is an important explanatory variable of economic growth, furthermore, it's a source of economic growth as in Barro model, Barro, (1990) ;Ferreira & Simoes (2013); Adams, & Atsu, (2014); Collier &Dollar, (2002) andBasnet, (2013) . The government expenditure is expected to affect growth positively.…”

Section: Government Consumptionmentioning

confidence: 99%

“…Equation 2 Equation 3 International Journal of Regional Development ISSN 2373-9851 2016 Where: GDPc is GDP per capita, which is GDP in constant prices, this is the proxy of economic growth, John et al (2015), Basnet, (2013 and Ekanayake, & Chatrna, (2010). ODA is total official development flow in constant prices.…”

Section: Equationmentioning

confidence: 99%

Remittances Impact on Economic Growth, Domestic Savings and Domestic Capital at the Presence of ODA and FDI in Selected MENA Countries

Sabra

2016

IJRD

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This article investigates the impact of remittances on economic growth, investment and domestic savings in selected MENA labor exporting countries. The estimations have been done in the presence of other international capital inflow, which are foreign aid and foreign direct investment. A multiple equations model estimated simultaneously using different techniques. We found a positive impact of remittances on both growth and investment, meanwhile a negative impact on domestic savings. Aid impacts negatively on both growth and savings where it finance consumption instead of investment and enhance rent seeking behavior. Government expenditure and FDI are important source of growth. We recommended that policies for encouraging final use of productive investment of remittances. In addition, enhancing more project of migrant in home country that may facilitate their trade with host countries. Finally, more efficient allocation of aid is requires, and attracting more FDI.

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“…Basnet (2013) examined the relationship on foreign aid, domestic savings and economic growth in South Asia using simultaneous equation system. The result indicated that aid has positive and significant effect on the growth rates of five nations studied during 1960 to 2008.…”

Section: Aids and Grants And Domestic Savingsmentioning

confidence: 99%

Does Foreign Capital Crowd–Out Domestic Saving in Developing Countries? An Empirical Investigation of Ghana

Angmortey¹,

Tandoh-Offin²

2014

IJEF

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Savings in Ghana like most developing countries is very low. This poses problems to investment spending and accelerated economic growth due to lack of capital formation. The trend has been to use foreign capital as the source of development. This work tries to examine the contribution that foreign capital has had on the Ghanaian economy. Precisely, the work examines the effect of foreign capital on domestic savings. More precisely, it examines the effect of foreign direct investment, foreign aids and grants and foreign commercial borrowing on domestic savings. The study uses the co-integration technique for the estimation of the long-run and the Error Correction Model (ECM) to estimate the short-run dynamic savings model in Ghana.The outcome of the study shows that there is a positive and significant effect of foreign capital on real domestic savings in Ghana in the long run, though not steady but volatile. The short-run dynamic model revealed that foreign capital has no significant effect on real domestic savings in Ghana in the short-run. The three components of foreign capital do not therefore displace domestic savings both in the short-run and the long-run. The policy implications are that, Ghana must rely more on foreign direct investment by improving on the locational advantages. Again, the capital market must be strengthened to provide an avenue for investing the profits of firms to prevent capital flight.

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Foreign Aid, Domestic Savings, And Economic Growth In South Asia

Abstract: ABSTRACT

Cited by 20 publications

References 16 publications

Foreign Aid, Domestic Savings and Economic Growth in Selected MENA Countries

Foreign Aid, Domestic Savings and Economic Growth in Selected MENA Countries

Remittances Impact on Economic Growth, Domestic Savings and Domestic Capital at the Presence of ODA and FDI in Selected MENA Countries

Does Foreign Capital Crowd–Out Domestic Saving in Developing Countries? An Empirical Investigation of Ghana

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