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 language | English |
|---|---|
| Pages (from-to) | 435-456 |
| Number of pages | 22 |
| Journal | Journal of African Business |
| Volume | 18 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2 Oct 2017 |
| Externally published | Yes |
Keywords
- Official Development Assistance
- aid
- sectoral growth
- sub-Saharan Africa
- volatility