IDEAS home Printed from https://ideas.repec.org/a/oup/jafrec/v25y2016i5p670-698..html
   My bibliography  Save this article

Determinants of ‘Exit’ from High Aid-Dependence

Author

Listed:
  • Degol Hailu
  • Admasu Shiferaw

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.

Suggested Citation

  • Degol Hailu & Admasu Shiferaw, 2016. "Determinants of ‘Exit’ from High Aid-Dependence," Journal of African Economies, Centre for the Study of African Economies, vol. 25(5), pages 670-698.
    • Handle: RePEc:oup:jafrec:v:25:y:2016:i:5:p:670-698.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jae/ejw012
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    foreign aid; aid-dependence; aid-exit; macroeconomic policy; developing countries;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jafrec:v:25:y:2016:i:5:p:670-698.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/csaoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.