Does political stability improve the aid-growth relationship? A panel evidence on selected Sub-Saharan African countries

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dc.contributor.authorArmah, Stephen Emmanuel
dc.date.accessioned2018-03-01T15:08:37Z
dc.date.available2018-03-01T15:08:37Z
dc.date.issued2012-12
dc.description.abstractSignificant ambiguity still surrounds the aid-growth relationship despite fifty years of research on the subject. For the case of Sub-Saharan Africa (SSA), a possible reason for the lack of consensus is that until recently the influence of political stability on the aidgrowth relationship had been largely ignored despite its relevance for the region. Further, although overlooked by the literature, the Instrumental Variable (IV) technique, the preferred treatment method of endogeneity in aid-growth relationships, may be ineffective in eliminating endogeneity bias because typical instruments for aid are neither sufficiently exogenous nor strong. Using a dataset of 31 SSA countries from 1984-2007, we re-visit the question of whether aid can spur growth in SSA using firstdifferencing (FD) to eliminate unobserved effect endogeneity while focusing on the role of political stability on the aid-growth relationship in SSA. Results suggest aid promotes growth conditional on political stability in SSA and that First Differencing (FD) eliminates a substantial amount of the endogeneity bias. Our results demonstrate the pertinence of a stable political environment to attaining the UN’s Millennium Development Goals (MDGs) for SSA countries since these goals inherently assume that aid can promote growth.en_US
dc.description.sponsorshipAshesi University Collegeen_US
dc.identifier.citationArmah, S. E. (2012) “Does political stability improve the aid-growth relationship? A panel evidence on selected Sub-Saharan African countries” Ashesi Economics Lectures Series Journal. 1, (1): 7–20en_US
dc.identifier.isbn978-0-9569670-1-5
dc.identifier.urihttp://hdl.handle.net/20.500.11988/357
dc.language.isoen_USen_US
dc.publisherAshesi University College, published by Mot Justeen_US
dc.subjectgrowthen_US
dc.subjectaiden_US
dc.subjectSub-Saharan Africaen_US
dc.subjectpolitical stabilityen_US
dc.titleDoes political stability improve the aid-growth relationship? A panel evidence on selected Sub-Saharan African countriesen_US
dc.typeArticleen_US

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