Foreign Aid and Africa:
Does it Increase Economic Growth?
By James Mumma
Countries Badly in need of
aid
Somewhat in need of
aidReceiving lots of Aid Cell 1 Cell 2
Receiving less AidCell 3 Cell 4
Participation in Aid with Regard to Need
Is Aid determined by need?
CountriesBadly in need of
aid
Somewhat in need of
aidReceiving lots of Aid Cell 1 Cell 2
Receiving less AidCell 3 Cell 4
Selection Question?
• Who receives Aid?
In reality aid is determined by much more than need
• Trade openness• Democracy• Civil liberties• Colonial status• Direct foreign investment• Initial income (PPP)• Population
Selection Cases: Uganda, Ghana, Tanzania, Ethiopia
Performance Question?
• What causes aid to in turn lead to increased economic growth?– Measure growth using Per Capita GDP
• Political Status?• Amount of aid received?• “Political will”?• Overall Dependence on Aid?• As % of government expenditure?
• Initial size of GDP per capita?
The End