Gillanders, RobertORCID: 0000-0001-9462-0005
(2016)
The effects of foreign aid in Sub-Saharan Africa.
The Economic and Social Review, 47
(3).
pp. 339-360.
ISSN 0012-9984
This paper contributes to the aid effectiveness debate by applying a vector autoregression
model to a panel of Sub-Saharan African countries. This method avoids the
need for instrumental variables and allows one to analyse the effect of foreign aid on
human development and on economic development simultaneously. The full sample
results indicate a small increase in economic growth following a fairly substantial aid
shock. The size of the effect puts the result somewhere between the arguments of aid
optimists and those of aid pessimists. Human development, for which I use the growth
rate of life expectancy as a proxy, responds positively to aid shocks in democracies.