Aid, Aid Volatility and Sectoral Growth in subSaharan Africa: Does Finance Matter?

Emmanuel Kumi, Muazu Ibrahim, Thomas Yeboah

Research output: Contribution to journalArticle

18 Citations (Scopus)
136 Downloads (Pure)

Abstract

This article examines the impact of aid and its volatility on sectoral growth by relying on panel dataset of 37 sub-Saharan African (SSA) countries for the period 1983-2014. Findings from the system-generalised methods of moments (GMM) show that, while foreign aid significantly drives sectoral growth, aid volatility deteriorates sectoral value additions impacting heavily on non-tradable sectors with no apparent effect on the agricultural sector. The deleterious effect of aid volatility on sectoral value additions in SSA is weakened by a well-developed financial system with significant impact on the tradable sector. Evidently, development of domestic financial markets enhances aid effectiveness.
Original languageEnglish
Pages (from-to)435-456
JournalJournal of African Business
Volume18
Issue number4
Early online date8 Aug 2017
DOIs
Publication statusPublished - 2017

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