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Foreign aid volatility and lifelong learning: demand-side empirics to a textual literature

Asongu, Simplice and Nwachukwu, Jacinta (2015): Foreign aid volatility and lifelong learning: demand-side empirics to a textual literature.

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Abstract

Purpose- This paper has put a demand-side empirical structure to the hypothesis that foreign aid volatility adversely affects choices to lifelong learning in recipient countries

Design/methodology/approach- Lifelong learning is measured as the combined knowledge acquired during primary, secondary and tertiary educational enrolments. Three types of aggregate foreign aid volatilities are computed in a twofold manner: baseline standard deviations and standard errors (standard deviations of residuals after first-order autoregressive processes). An endogeneity robust dynamic system GMM empirical strategy is employed.

Findings- The findings broadly show that foreign aid volatility does not adversely affect the demand-side choices of lifelong learning in Africa.

Practical implications- As a policy implication, when faced with aid uncertainty, the demand for education would increase. This may be explained by the need for more self-reliance in order to mitigate income risks or/and the use of education as means of copping with uncertainty. Moreover, the findings indirectly confirm a stream of the literature sustaining that when faced with uncertainty in external financial flows, countries may recourse to promoting human resource development through lifelong learning and knowledge economy as a competitive advantage. This may also explain why countries which have acknowledged scarcity in external financial flows from natural resources have done relatively better compared to their natural resource-rich counterparts.

Originality/value- This paper has provided demand-side empirics to a hypothesis that could substantial influence policy making.

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