Foreign Aid Volatility and Lifelong Learning: Demand-Side Empirics to a Textual Literature
African Governance and Development Institute WP/15/016
21 Pages Posted: 31 May 2015
Date Written: May 13, 2015
Purpose - This paper has put a demand-side empirical structure to the hypothesis that foreign aid volatility adversely affects choices to lifelong learning in recipient countries.
Design/Methodology/Approach - Lifelong learning is measured as the combined knowledge acquired during primary, secondary and tertiary educational enrollments. Three types of aggregate foreign aid volatilities are computed in a twofold manner: baseline standard deviations and standard errors (standard deviations of residuals after first-order autoregressive processes). An endogeneity robust dynamic system GMM empirical strategy is employed.
Findings - The findings broadly show that foreign aid volatility does not adversely affect the demand-side choices of lifelong learning in Africa.
Practical Implications - As a policy implication, when faced with aid uncertainty, the demand for education would increase. This may be explained by the need for more self-reliance in order to mitigate income risks or/and the use of education as means of copping with uncertainty. Moreover, the findings indirectly confirm a stream of the literature sustaining that when faced with uncertainty in external financial flows, countries may recourse to promoting human resource development through lifelong learning and knowledge economy as a competitive advantage. This may also explain why countries which have acknowledged scarcity in external financial flows from natural resources have done relatively better compared to their natural resource-rich counterparts.
Originality/Value - This paper has provided demand-side empirics to a hypothesis that could substantial influence policy making.
Keywords: Lifelong learning; Foreign aid; Development; Africa
JEL Classification: I20; I28; F35; O55; P16
Suggested Citation: Suggested Citation