FOREIGN AID AND ECONOMIC DEVELOPMENT IN SUB SAHARAN AFRICA: THE ROLE OF INSTITUTIONS (1996-2010)
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- NGN 3000
ABSTRACT This study examined the relationship between foreign aid and economic development in sub Saharan Africa. The study seeks to examine the role of institutions in aid effectiveness and economic development in Sub Saharan Africa. The study adopted a theoretical framework similar to the Endogenous or New Growth model, as well as; the system generalized method of moments (GMM) technique of estimation was adopted in order to overcome the challenge of endogeneity perceived in the institutions variables and Aid growth argument. It was observed that foreign aid significantly influence Real GDP Per Capita (the proxy for economic development) in Sub Saharan Africa. Also, variables like gross fixed capital formation, rule of law, control of corruption (which are proxy for institutions) and Human capital had a significant effect on Economic development in sub Saharan Africa while labour had no significant effect on economic development in Sub Saharan Africa
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