Aid, Aid Volatility and Sectoral Growth in Sub-Saharan Africa: Does Finance Matter?

Emmanuel Kumi, Muazu Ibrahim, Thomas Yeboah

Research output: Contribution to journalArticle

19 Citations (Scopus)

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-generalized methods of moments 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
Number of pages22
JournalJournal of African Business
Volume18
Issue number4
Early online date8 Aug 2017
DOIs
Publication statusPublished - 2 Oct 2017
Externally publishedYes

Keywords

  • aid
  • Official Development Assistance
  • sectoral growth
  • sub-Saharan Africa
  • volatility

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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