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

Emmanuel Kumi, Muazu Ibrahim, Thomas Yeboah

Research output: Contribution to journalArticlepeer-review

27 Citations (Scopus)
182 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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