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Determinants of Multilateral Official Development Assistance: Evidence from a Panel Study of Countries in Sub-Saharan Africa

Hlavac, Marek (2007): Determinants of Multilateral Official Development Assistance: Evidence from a Panel Study of Countries in Sub-Saharan Africa.

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Abstract

Countries in sub-Saharan Africa are some of the poorest and least developed in the world, with deplorable health and education levels. One way intended to promote better living standards in this region has been through development aid. This study examines the determinants of multilateral aid inflows to sub-Saharan Africa to determine whether it is directed to the least developed countries. I use panel data about 22 countries in sub-Saharan Africa from the 1995-2004 period to estimate a regression model in which I treat multilateral aid inflows as a proportion of GDP as the dependent variable, and proxies for health levels, education and institutional quality as explanatory variables. My analysis yields some evidence, especially in panel regressions with time-fixed effects, in support of the hypothesis that countries with poorer health and education levels receive more multilateral aid as a proportion of their gross domestic products. The corruption level, as measured by the International Country Risk Guide, however, appears to be an unimportant factor in the allocation of multilateral ODA.

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