Article
Determinants of ‘Exit’ from High Aid-Dependence
Journal of African Economies
(2016)
Abstract
This paper examines the dynamics of aid-dependence using a large sample of recipient countries observed over five decades. High dependence on foreign aid exhibits strong persistence even after controlling for potential drivers of aid-to-GDP ratio. We find that investment rate and manufacturing intensity are negatively correlated with aid-dependence while a growing investment–savings gap and inflation contribute to its persistence. Among resource-abundant recipients, the probability of high aid-dependence increases with resource rents although oil exporters are on average more self-reliant than non-oil countries. The quality of political institutions is negatively associated with aid-dependence in countries with a history of heavy reliance on aid but not necessarily in the typical recipient country.
Disciplines
Publication Date
November, 2016
DOI
https://doi.org/10.1093/jae/ejw012
Citation Information
Degol Hailu and Admasu Shiferaw. "Determinants of ‘Exit’ from High Aid-Dependence" Journal of African Economies Vol. 25 Iss. 5 (2016) p. 670 - 698 Available at: http://works.bepress.com/admasu-shiferaw/28/