Rainfall Variability, Foreign Aid and Economic Growth in Sub-Saharan Africa
الموضوعات :
Toyin Ajibade
1
(Department of Agricultural Economics and Farm Management, Faculty of Agriculture, University of Ilorin, Ilorin, Nigeria)
Jubril Animashaun
2
(Department of Agricultural Economics and Farm Management, Faculty of Agriculture, University of Ilorin, Ilorin)
الکلمات المفتاحية: Income, rainfall, foreign development aid, Sub-Saharan Africa,
ملخص المقالة :
In this study, we address a broad question that relates foreign development aid to economic growth in 41 Sub-Saharan African (SSA) countries employing panel data spanning a twenty-five-year period. The panel data was analysed using fixed effect Ordinary Least Square model. We explored the within-country rainfall distribution to identify the impact of foreign development aid per capita (Value of Official Development Assistance)on GDP per capita. Identifying aid with exogenous rainfall shocks will plausibly address the endogeneity bias identified in previous studies. In the first stage, we find that rainfall shocks negatively correlate with amount of aid per capita received suggesting that countries with negative economic shock receive more foreign assistance than countries without. However,in stage two, we find that aid per capita has a statistically weak and negative impact on income per capita in the region.We can identify several practical reasons why aid may fail to translate to growth in this region. For one, because aid is a form of unearned rents, aid meant for public consumption could be privately appropriated by political elites, distort capital accumulation, and could undermine the broader economic development when there is an income shock. While SSA countries receiving aid may not grow faster than countries without, aid might still play an economically useful role at the micro-level. Specifically,aid could be beneficial if local inputs at the micro-level are actively involved in allocation of resources and deployed for the identification of developmental needs.Aid could also be useful at suppressing civil conflict associated with climate vagaries.
Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369-1401.
Alesina, A., & Dollar, D. (2000). Who gives foreign aid to whom and why? Journal of Economic Growth, 5(1), 33-63.
Angrist, J. D., & Krueger, A. B. (2001). Instrumental variables and the search for identification: From supply and demand to natural experiments. Journal of Economic Perspectives, 15(4), 69-85.
Angrist, J. D., Imbens, G. W., & Rubin, D. B. (1996). Identification of causal effects using instrumental variables. Journal of the American Statistical Association, 91(434), 444-455
Barrios, S., Bertinelli, L., & Strobl, E. (2010). Trends in rainfall and economic growth in Africa: A neglected cause of the African growth tragedy. The Review of Economics and Statistics, 92(2), 350-366.
Bauer, L. P. T. (2004). From subsistence to exchange and other essays (pp 41-52). Princeton University Press.
Boone, P. (1996). Politics and the effectiveness of foreign aid. European Economic Review, 40(2), 289-329.
Bräutigam, D. A., & Knack, S. (2004). Foreign aid, institutions, and governance in sub-Saharan Africa. Economic Development and Cultural Change, 52(2), 255-285.
Brückner, M., & Ciccone, A. (2011). Rain and the democratic window of opportunity. Econometrica, 79(3), 923-947.
Buhaug, H. (2010). Climate not to blame for African civil wars. Proceedings of the National Academy of Sciences, 107(38), 16477-16482.
Burnside, C., & Dollar, D. (2000). Aid, policies, and growth. American Economic Review, 90(4), 847-868.
Chenery, H. B., & Strout, A. M. (1966). Foreign assistance and economic development. The American Economic Review, 56(4), 679-733.
Clemens, M. A., Radelet, S., Bhavnani, R. R., & Bazzi, S. (2012). Counting chickens when they hatch: Timing and the effects of aid on growth. The Economic Journal, 122(561), 590-617.
Collier, P., & Gunning, J. W. (1999). Explaining African Economic Performance. Journal of Economic Literature, Vol. 37, March.
Collier, P., & Hoeffler, A. (2004). Greed and grievance in civil war. Oxford Economic Papers, 56(4), 563-595.
Cooper, P. J. M., Dimes, J., Rao, K. P. C., Shapiro, B., Shiferaw, B., & Twomlow, S. (2008). Coping better with current climatic variability in the rain-fed farming systems of sub-Saharan Africa: An essential first step in adapting to future climate change? Agriculture, Ecosystems & Environment, 126(1-2), 24-35.
Dalgaard, C. J., Hansen, H., & Tarp, F. 2004): On the empirics of foreign aid and growth. The Economic Journal, 114 (June), F191–F216.
Deaton, A. (2013). The great escape: health, wealth, and the origins of inequality. Princeton University Press.
Easterly, W. (2003). Can foreign aid buy growth? Journal of Economic Perspectives, 17(3), 23-48.
Easterly, W. (2009). Can the west save Africa? Journal of economic literature, 47(2), 373-447.
Easterly, W., & Easterly, W. R. (2006). The white man's burden: why the West's efforts to aid the rest have done so much ill and so little good. Penguin.
Easterly, W., Levine, R., & Roodman, D. (2004). Aid, policies, and growth: comment. American economic review, 94(3), 774-780.
Fearon, J. D., & Laitin, D. D. (2003). Ethnicity, insurgency, and civil war. American Political Science Review, 97(1), 75-90.
Fearon, J. D., Humphreys, M., & Weinstein, J. M. (2009). Can development aid contribute to social cohesion after civil war? Evidence from a field experiment in post-conflict Liberia. American Economic Review, 99(2), 287-91.
Fjelde, H., & von Uexkull, N. (2012). Climate triggers: Rainfall anomalies, vulnerability and communal conflict in sub-Saharan Africa. Political Geography, 31(7), 444-453.
Gleditsch, N. P. (2012). Whither the weather? Climate change and conflict. Journal of Peace Research, 49(1), 3-9.
Glennie, J., & Sumner, A. (2014). The $138.5 billion question: when does foreign aid work (and when it doesn’t). CGD Policy Paper, 49.
Gomanee, K., Girma, S., & Morrissey, O. (2005). Aid and growth in Sub‐Saharan Africa: accounting for transmission mechanisms. Journal of International Development, 17(8), 1055-1075.
Hendrix, C. S., & Salehyan, I. (2012). Climate change, rainfall, and social conflict in Africa. Journal of Peace Research, 49(1), 35-50.
Hsiang, S. M., Burke, M., & Miguel, E. (2013). Quantifying the influence of climate on human conflict. Science, 341(6151), 1235367.
Hulme M., Doherty R., Ngara T., New M. and Lister D. (2001). Africa climate change: 1900-2100. Climate Research. 17 (2): 145-168.
Imbens, G. and Angrist, J. (1994), Identification and estimation of local average treatment effects. Econometrica, 62, 467-476.
Kosack, S. (2003). Effective aid: How democracy allows development aid to improve the quality of life. World Development, 31(1), 1-22.
Lahiri, S., & Raimondos‐Møller, P. (2000). Lobbying by ethnic groups and aid allocation. The Economic Journal, 110(462), 62-79.
Magadza, C. H. D. (1994). Climate change: some likely multiple impacts in Southern Africa. Food Policy, 19(2), 165-191.
McArthur, J. W., & Sachs, J. D. (2018). Agriculture, Aid, and Economic Growth in Africa. The World Bank Economic Review, lhx029, https://doi.org/10.1093/wber/lhx029
McGillivray, M., Feeny, S., Hermes, N., & Lensink, R. (2006). Controversies over the impact of development aid: it works; it doesn't; it can, but that depends. Journal of International Development: The Journal of the Development Studies Association, 18(7), 1031-1050.
Moss, T. J., Pettersson Gelander, G., & Van de Walle, N. (2006). An aid-institutions paradox? A review essay on aid dependency and state building in sub-Saharan Africa.
Ndikumana, L., & Boyce, J. K. (2011). Africa's odious debts: how foreign loans and capital flight bled a continent. Zed Books Ltd.
Nordås, R., & Gleditsch, N. P. (2007). Climate change and conflict. Political Geography, 26(6), 627-638.
Roodman, D. (2015). A Replication of “Counting Chickens when They Hatch (Economic Journal 2012). Public Finance Review, 43(2), 256-281.
Savun, B., & Tirone, D. C. (2012). Exogenous shocks, foreign aid, and civil war. International Organization, 66(3), 363-393.
Sharples, N., Jones, T., & Martin, C. (2014). Honest accounts? The true story of Africa’s billion dollar losses. Health Poverty Action
Shleifer, A. (2009). Peter Bauer and the failure of foreign aid.Cato J., 29, 379.
Speranza, C. I., Kiteme, B., & Wiesmann, U. (2008). Droughts and famines: the underlying factors and the causal links among agro-pastoral households in semi-arid Makueni district, Kenya. Global Environmental Change, 18(1), 220-233.
Svensson, J. (2003). Why conditional aid does not work and what can be done about it? Journal of Development Economics, 70(2), 381-402.
Thacker, J. (2015). From Charity to Justice: Revisited. Transformation, 32(2), 112-127.
Theisen, O. M., Holtermann, H., & Buhaug, H. (2012). Climate wars? Assessing the claim that drought breeds conflict. International Security, 36(3), 79-106.
Von Uexkull, N. (2014). Sustained drought, vulnerability and civil conflict in Sub-Saharan Africa. Political Geography, 43, 16-26.
