The Questionable Economics of Development Assistance in Africa: Hot-Fresh Evidence, 1996-2010

The Review of Black Political Economy, 41(4), pp. 433-454 (2014).

43 Pages Posted: 23 Nov 2014 Last revised: 1 Apr 2015

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: August 22, 2014

Abstract

This paper assesses the aid-development nexus in 52 African countries using updated data (1996-2010) and a new indicator of human development (adjusted for inequality). The effects of Total Net Official Development Assistance (NODA), NODA from the Development Assistance Committee (DAC) and NODA from Multilateral donors on economic prosperity (at national and per capita levels) are also examined. The findings broadly indicate that development assistance is detrimental to GDP growth, GDP per capita growth and inequality adjusted human development. The magnitude of negativity (which is consistent across specifications and development dynamics) is highest for NODA from Multilateral donors, followed by NODA from DAC countries. Given concerns on the achievement of the MDGs, the relevance of these results point to the deficiency of foreign aid as a sustainable cure to poverty in Africa. Though the stated intents or purposes of aid are socio-economic, the actual impact from the findings negates this. It is a momentous epoque to solve the second tragedy of foreign aid; it is high time economists and policy makers start rethinking the models and theories on which foreign aid is based. In the meantime, it is up to people who care about the poor to hold aid agencies accountable for piecemeal results. Policy implications and caveats are discussed.

Keywords: Foreign Aid; Political Economy; Development; Africa

JEL Classification: B20; F35; F50; O10; O55

Suggested Citation

Asongu, Simplice, The Questionable Economics of Development Assistance in Africa: Hot-Fresh Evidence, 1996-2010 (August 22, 2014). The Review of Black Political Economy, 41(4), pp. 433-454 (2014). . Available at SSRN: https://ssrn.com/abstract=2529443

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
36
Abstract Views
321
PlumX Metrics