Aid, Aid Volatility and Sectoral Growth in Sub-Saharan Africa: Does Finance Matter?. Issue 4 (2nd October 2017)

• Record Type: Journal Article
• Authors: Kumi, Emmanuel; Ibrahim, Muazu; Yeboah, Thomas
• Is Part Of: Journal of African business. Volume 18:Issue 4(2017)
• Page Start: 435
• Page End: 456
• Publication Date: 2017-10-02
• Subjects: Official Development Assistance -- aid -- volatility -- sectoral growth -- sub-Saharan Africa; F35 -- O10 -- O14 -- O47 -- O55; Africa -- Commerce -- Periodicals; Africa -- Economic conditions -- Periodicals; 338.96
• DOI: 10.1080/15228916.2017.1363358
• Languages: English
• ISSNs: 1522-8916

Abstract

ABSTRACT: This article examines the impact of aid and its volatility on sectoral growth by relying on panel dataset of 37 sub-Saharan African (SSA) countries for the period 1983–2014. Findings from the system-generalized methods of moments show that, while foreign aid significantly drives sectoral growth, aid volatility deteriorates sectoral value additions impacting heavily on non-tradable sectors with no apparent effect on the agricultural sector. The deleterious effect of aid volatility on sectoral value additions in SSA is weakened by a well-developed financial system with significant impact on the tradable sector. Evidently, development of domestic financial markets enhances aid effectiveness.