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The Long-run relationship between ODA, growth and governance: An application of FMOLS and DOLS Approachs

Yahyaoui, Ismahen and Bouchoucha, Najeh (2019): The Long-run relationship between ODA, growth and governance: An application of FMOLS and DOLS Approachs. Published in:

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Abstract

This paper investigates the role of good governance to ameliorate, in the long-run term, the effectiveness of foreign aid in terms of economic growth in Maghrebian economies from 1996 to 2014, using the FMOLS and DOLS model. According to the results of the analysis, it was determined that there is a negative relationship between foreign aid and economic growth in the long-run term. However, the effectiveness of aid had ameliorated if countries have good quality of governance, measured by the six dimensions of World Bank Governance. Nevertheless, the most pertinent indicators that ameliorate the aid’s effectiveness are Control of Corruption, Voice and Accountability and Quality of Regulation.

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