Foreign aid distorting effects: an empirical assessment for Sub-Saharan Africa

Mongongo Pacifique Dosa, Tezanos Sergio Vázquez, Nadia Molenaers


Sub-Saharan Africa (SSA) is a key region for the success of the 2030 Agenda for Sustainable Development. However, there is no consensus about the contribution of Official Development Assistance (ODA) in the promotion of economic growth and the reduction of extreme poverty in this region. We build its analytical framework and make the subsequent estimations during the period 1991–2014. We find four main results: i) ODA to SSA has exerted both distorting and stimulating effects on growth but the latter effects were larger than the former; ii) increasing both aid grants and aid loans, and increasing the ratio of loans to grants, may induce higher growth; iii) however, such a reallocation may only be positive in countries with sustainable debt burdens; and iv) although ODA was effective in aggregate terms, it did not significantly boost the income of the poorest citizens, which reveals a grave distributional deficiency.

Palabras clave

Sub-Saharan Africa; poverty eradication; aid effectiveness; Sustainable Development Goals; institutional distortions.

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e-ISSN:2340-4264   -   ISSN: 1576-0162

Entidad editora: Universidad de Huelva. Servicio de Publicaciones.