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

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Jacinta Nwachukwu

University of Huddersfield - Business School

Date Written: May 13, 2015

Abstract

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

Asongu, Simplice and Nwachukwu, Jacinta C., Foreign Aid Volatility and Lifelong Learning: Demand-Side Empirics to a Textual Literature (May 13, 2015). African Governance and Development Institute WP/15/016. Available at SSRN: https://ssrn.com/abstract=2612385 or http://dx.doi.org/10.2139/ssrn.2612385

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Jacinta C. Nwachukwu

University of Huddersfield - Business School ( email )

Queensgate
Huddersfield HD1 3DH
United Kingdom

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