Aid-Growth Relationship: Evidence From a Co-integratıon Analysis for the Five Poorest Countries of the World

Öz

Abstract: The impact of Official Development Assistance (ODA) which is geared towards economic

growth of the 5 poorest economies of the world (Niger, Congo, Burundi, Malawi, and the Central

African Republic) was analysed. Employing a well-structured growth model and yearly data from

1986 – 2015, we examine this growing nexus using a robust model specification, hence testing both

the long and short run relationship between economic growth and ODA. The ARDL long-run

relationship and an Error Correction Model (ECM) was used to test for the relationship alongside

the rate at which the variables returns back to the long-run equilibrium following a shock in the

short run. There exist a significant positive association for Niger as well as Malawi in the long run,

while other countries displayed no long-run relationship. Interestingly, the relationship in the short

run was found only in Congo. The derived conclusion from this paper is that the government have

to re-evaluate the sectoral allocation of foreign Aid received to ensure higher efficiency and a

prospective economic growth and development of these countries.

Keywords: Foreign aid, economic growth, RGDPpc, ARDL, ECM

Anahtar Kelimeler

• ARDL,ECM

Kaynakça

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