Economic Growth Risk: The Role of Foreign Development Assistance and Its Uncertainty

Abstract

This study is set up to investigate if foreign development assistance and its uncertainty have a joint impact on economic growth risk. Based on the analysis of the average data across 157 countries and territories, the results indicate that, on average, increased foreign development assistance is associated with lower economic growth risk (b = -0.077; p = 0.053), yet increased foreign development assistance uncertainty is significantly linked to higher economic growth risk (b = 0.227; p = 0.000). Foreign development assistance and its uncertainty jointly explain about 11.27% of variation of economic growth risk across countries. The findings provide an important implication for policy debate.

Keywords: Foreign Development Assistance, Uncertainty, Economic Growth Risk

JEL Classification: F35, O11