Foreign Aid’s Effect on Economic Growth, New Results from WAEMU’s Countries

Abstract

This study investigates whether foreign aid (AID) has a significant influence on economic growth in WAEMU's (West African Economic and Monetary Union) countries. We use two (2) types of aid data: aggregate aid and disaggregate aid (aid in education, aid in agriculture, aid in trade policies and regulations and humanitarian aid) to run two (2) different regressions. Both the within-dimension and between-dimension estimators reveal that in the long run, the effect of AID on economic growth is heterogeneous across sectors and aid in agriculture, aid in trade policies and regulations as well as aid in education encourages economic growth.

Economic Growth and Extreme Poverty in Sub-Saharan African Countries: Non-Linearity and Governance Threshold Effect

“…Our findings are similar to the results presented by Doucouliagos and Paldam ( 2008 ), Burnside and Dollar ( 2000 ), Fiodendji and Evlo ( 2013 ), Stiglitz ( 2002 ) and Sachs ( 2005 ) who found that, official development assistance contributes to economic growth and poverty reduction. Moreover, contemporary studies on aid effectiveness in the context of Sub-Saharan Africa, the analyzes of Arndt et al ( 2010 ), Dreher and Langlotz ( 2020 ), Aboubacar et al ( 2015 ) and Civelli et al ( 2017 ) come to the same conclusion regarding the positive effect of aid on economic growth. In contrast to our result, which promotes aid effectiveness, Moyo ( 2009 ) and Mbah and Amassoma ( 2014 ) point out that aid has a negative effect on the growth of developing countries in that it encourages mismanagement and only benefits a certain oligarchy in developing countries at the expense of the people and subsequently does not reduce poverty.…”

Women's Civil and Political Rights in Lebanon and France and Their Impact on Economic Growth

“…(Saleh, Assaf, Ihalanayake, & Lung, 2015) studied the contribution of tourism in GDP for the three countries, Bahrain, Jordan, Saudi Arabia concluding a long-term equilibrium between tourism growth and GDP. (Aboubacar, Xu, & Ousseini, 2015) focused in whether the foreign aid (AID) has an important effect on economic growth in the member countries of the West African Economic and Monetary Union (WAEMU). (Adeleye, Adeteye, & Adewuyi, 2015) studied the effect of international trade on economic growth in Nigeria.…”

Is too much foreign aid a curse or blessing to developing countries?

“…The aid-growth nexus is debatable not only theoretically, but also empirically. Even though some studies have established positive effect of aid on economic growth (Aboubacar et al, 2015;Lee and Alemu, 2015;Moolio and Kong, 2016;Kitessa, 2018), others find negative (Appiah-- Konadu et al, 2013;Aghoutane and Karim, 2017;Sothan, 2018;Edward and Tumwebaze, 2020;Yahyaoui and Bouchoucha, 2020), and some others find insignificant (Tang and Bundhoo, 2017;Kirikkaleli et al, 2021) aid-growth relationship. The empirical inconclusive findings concerning the relationship between foreign aid and economic growth created skepticism among researchers across the globe.…”