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Foreign Aid and Economic Growth in Egypt: A Cointegration Analysis

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  • Hoda Abd El Hamid Ali

    (Department of Economics and Foreign Trade, Faculty of Commerce and Business Administration, Helwan University, Cairo, Egypt)

Abstract

There is a current and growing debate on the effectiveness of foreign aid, especially in Egypt, as the country is going through a critical period in its transition to democracy. The obvious question is to what extent foreign aid to Egypt will be effective in promoting economic growth. By using Johansen Cointegration test and Vector Error Correction Model (VECM), the paper finds a negative and significant impact of foreign aid on economic growth in the long and short run. It is highly suggested that Egypt must rely upon the indigenous resources to promote development rather depending on external factors.

Suggested Citation

  • Hoda Abd El Hamid Ali, 2013. "Foreign Aid and Economic Growth in Egypt: A Cointegration Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 3(3), pages 743-751.
    • Handle: RePEc:eco:journ1:2013-03-17
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    References listed on IDEAS

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    Cited by:

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    2. Ismahene Yahyaoui & Najeh Bouchoucha, 2020. "Foreign Aid-Growth Nexus in Africa: Do Institutions Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(4), pages 1663-1689, December.
    3. repec:aly:journl:201945 is not listed on IDEAS
    4. Hassan, Mai, 2017. "The impact of the shadow economy on aid and economic development nexus in Egypt," MPRA Paper 80990, University Library of Munich, Germany.
    5. Muhammad Azam & Yi Feng, 2022. "Does foreign aid stimulate economic growth in developing countries? Further evidence in both aggregate and disaggregated samples," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(2), pages 533-556, April.
    6. Ahmad Mashal & Emad Ahmad & Lama Nasrawi & Anas Ghazalat, 2021. "The impact of external funding flow on Jordan’s GDP (1997-2017)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(3), pages 328-337, April.
    7. Yahyaoui, Ismahen & Bouchoucha, Najeh, 2019. "The Long-run relationship between ODA, growth and governance: An application of FMOLS and DOLS Approachs," MPRA Paper 95938, University Library of Munich, Germany.
    8. Yahyaoui, Ismahene & Hamdaoui, Mekki & Bouchoucha, Najeh, 2019. "Official development aid effectiveness and economic growth in African countries: The role of the governance," MPRA Paper 95410, University Library of Munich, Germany.
    9. Yahyaoui, Ismahen & Bouchoucha, Najeh, 2018. "Does aid enhance growth?," MPRA Paper 91093, University Library of Munich, Germany.

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    More about this item

    Keywords

    Economic Growth; Foreign Aid; Johansen Cointegration Test; Vector Error Correction Model; Egypt;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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