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The impact of Foreign Aid on Economic Growth in Sub-Sahara Africa: The mediating role of Institutions

ADUSEI, ELIZABETH (2020): The impact of Foreign Aid on Economic Growth in Sub-Sahara Africa: The mediating role of Institutions.

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Abstract

The study examines the impact of aid on economic growth in Sub-Saharan Africa and also investigates whether institutions mediate the absorptive capacity of aid in the region. The concept of foreign aid has been flagged as the solution to ending Africa’s poverty predicament by some scholars; as such Least Developing countries depend on it to finance their budget and embark on other developmental projects. The study observed that aid positively affect economic growth in the region. Thus it serves as a form of investment in the region, thereby increasing capital accumulation. However, the study also observed that institutional quality alone does not mediate the effectiveness of aid on economic growth in the region. Other factors including good fiscal policies, monetary policies, etc. need to be considered to increase the absorptive capacity of aid in the region.

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