Aid-Growth Relationship: Evidence From a Co-integratıon Analysis for the Five Poorest Countries of the World
Abstract:
The impact of Official Development Assistance (ODA) which is geared towards
economic
growth
of the 5 poorest economies of the world (Niger, Congo, Burundi, Malawi, and the
Central
African
Republic) was analysed. Employing a well-structured growth model and yearly
data from
1986
–
2015, we examine this growing nexus
using a robust model specification, hence testing both
the
long and short run relationship between economic growth and ODA. The ARDL
long-run
relationship
and an Error Correction Model (ECM) was used to test for the relationship
alongside
the
rate at which the variables returns back to the long-run equilibrium following
a shock in the
short
run. There exist a significant positive association for Niger as well as Malawi
in the long run,
while
other countries displayed no long-run relationship. Interestingly, the
relationship in the short
run
was found only in Congo. The derived conclusion from this paper is that the
government have
to
re-evaluate the sectoral allocation of foreign Aid received to ensure higher
efficiency and a
prospective
economic growth and development of these countries.
Keywords:
Foreign aid, economic growth, RGDPpc, ARDL, ECM
Aid-Growth Relationship: Evidence From a Co-integratıon Analysis for the Five Poorest Countries of the World
Abstract:
The impact of Official Development Assistance (ODA) which is geared towards
economic
growth
of the 5 poorest economies of the world (Niger, Congo, Burundi, Malawi, and the
Central
African
Republic) was analysed. Employing a well-structured growth model and yearly
data from
1986
–
2015, we examine this growing nexus
using a robust model specification, hence testing both
the
long and short run relationship between economic growth and ODA. The ARDL
long-run
relationship
and an Error Correction Model (ECM) was used to test for the relationship
alongside
the
rate at which the variables returns back to the long-run equilibrium following
a shock in the
short
run. There exist a significant positive association for Niger as well as Malawi
in the long run,
while
other countries displayed no long-run relationship. Interestingly, the
relationship in the short
run
was found only in Congo. The derived conclusion from this paper is that the
government have
to
re-evaluate the sectoral allocation of foreign Aid received to ensure higher
efficiency and a
prospective
economic growth and development of these countries.
Keywords:
Foreign aid, economic growth, RGDPpc, ARDL, ECM
Keywords:
Foreign aid economic growth, RGDPpc,
___
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- ISSN: 1309-2294
- Yayın Aralığı: Yılda 2 Sayı
- Başlangıç: 2010
- Yayıncı: Lefke Avrupa Üniversitesi
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