Sectoral Analysis of the Impact of Foreign Aid on Economic Growth in Ethiopia: Time Series Analysis of Agriculture, Education and Health Sectors
Sectoral Analysis of the Impact of Foreign Aid on Economic Growth in Ethiopia: Time Series Analysis of Agriculture, Education and Health Sectors

Author: Fikadu Goshu

Publisher: diplom.de

Published: 2015-02-01

Total Pages: 78

ISBN-13: 3954898586

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This study has examined sectoral analysis of the impact of foreign aid on aggregate and sectoral economic growth in Ethiopia over the period 1981 to 2012 using Multivariate Vector Auto Regression analysis. All the necessary time series tests such as stationary test, co-integration test, weak exiguity test, vector error correction, and causality test in vector error correction model and the like are conducted. The empirical result from the growth equation shows that aid has a significant positive impact on educational sector GDP growth in the long run. On the other hand, foreign aid has positive but insignificant impact on real GDP growth, agriculture GDP growth, and health sector GDP growth of Ethiopia for the period under consideration. Foreign aid is effective in enhancing economic growth at aggregate level of Ethiopia in general and education sector in particular. The result of the study reveals that there is a bi-directional causal relationship between educational GDP and educational foreign aid in Ethiopia. There is also a unidirectional causality between agricultural aid and agricultural GDP growth. However, the health sector does not show any causality with their respective sector aid. This implies that aid allocated for certain sectors is ineffective in achieving its objectives of economic growth. Therefore, aid recipient country like Ethiopia has to work how to enhance the domestic revenue raising capacity of the country which is at the heart of the mechanism to meet the capital required for the economy in times of short falls and ineffectiveness of external resources.

The Impact of Foreign Aid on Government Expenditure in Ethiopia
The Impact of Foreign Aid on Government Expenditure in Ethiopia

Author: Fikadu Goshu

Publisher: GRIN Verlag

Published: 2014-12-17

Total Pages: 76

ISBN-13: 3656862702

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Scientific Study from the year 2014 in the subject Economics - Case Scenarios, Wollega University (Department of Economics), language: English, abstract: This study has examined the impact of foreign aid on government expenditure in Ethiopia over the period 1981 to 2012 using Multivariate Vector Auto Regression analysis. All the necessary time series tests such as stationary test, co-integration, weak exiguity, and other tests are conducted. The empirical result from the long run fungibility equation result indicates that sectoral aid has negative effect on its sector spending in developmental sectors except for agricultural sector government spending. The estimate of agricultural aid also support that a 1percent increase in agricultural aid leads to a 0.83percent increase in agricultural spending. Aid other than health aid also has positive impact on health spending. The positive coefficient of aid other than the health implies that there is an aid diversion towards health sector from the others. The negative coefficients of sectoral aid on the sector spending and the negative coefficients of aid other than sector-specific aid, indicate diversion of aid away from the specific sector. Negative coefficients of explanatory variables may arise when there is a diversion of categorical aid from developmental investment towards non developmental expenditure such as general service government expenditures. The result also shows education aid is fungible both in short and long run. Health aid is fungible in the long run but not in the short run. Agriculture aid is non fungible in both long and short run in Ethiopia. The coefficient of aid other than education aid has positive sign that implies the diversion of foreign aid to the education sector. Foreign aid have also negative impact on all of non developmental government spending In order to get the desired benefit from foreign aid, Ministry of Finance and Economic Development has to set sound financial management system which stimulates economic growth and mitigate any diversion of developmental sector aid to other non developmental expenditure particularly in education and health sectors. Therefore, effective and efficient monitoring system which was purpose oriented utilization of foreign aid is central to make sectoral spending non fungible in Ethiopia.

The Impact of Development Interventions in Ethiopia
The Impact of Development Interventions in Ethiopia

Author: Jonathan Pycroft

Publisher:

Published: 2009

Total Pages: 0

ISBN-13:

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It has proved a persistent challenge to identify the optimal form of interventions into any developing economy, especially when those interventions come from abroad. The papers in this thesis explore different aspects of intervention in Ethiopia, a poor nation that is highly dependent on foreign aid. The first paper (Chapter 3) investigates the perceptions of aid actors in Ethiopia, with possible aid narratives being assessed against evidence from a series of key informant interviews. It emerges that there is a clear support for programme over project aid, a belief that the Ethiopian government has strong ownership of the aid agenda, active support for greater harmonisation and alignment and controversy over food aid, all of which are compared to other possible narratives that donors could support. The second paper (Chapter 4) addresses the interaction of aid and trade. Aid flows can damage trade through appreciation of the exchange rate. However, if aid benefits the supply-side of the economy, the impact of the appreciated exchange rate on exports is lessened or reversed. Using both static and dynamic CGE models for Ethiopia, the impact of supply-side benefits is estimated. The model is also used to measure the magnitude of the supply-side benefits required to maintain real exports at their initial level following an aid inflow. The third paper (Chapter 5) uses agricultural census data to investigate the determinants of improved seed adoption, and secondly, if farmers do adopt, how much more productive they become. The government's Agricultural-Development Led Industrialisation (ADLI) strategy particularly encourages the adoption of modern technologies, though with only modest success thus far. The productivity of improved seeds on rural farms is far below that on government extension plots and the econometric analysis suggests that were non-users to adopt improved seeds they would still be less productive than current improved seed users.

The Impact of Foreign Aid on Government Expenditure in Ethiopia
The Impact of Foreign Aid on Government Expenditure in Ethiopia

Author: Abas Mohammed

Publisher: LAP Lambert Academic Publishing

Published: 2014-08-12

Total Pages: 80

ISBN-13: 9783659587221

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Foreign aid has been an identified issue among researchers for the last seven decades through various debatable questions in different period.Given, absence of common consensus among researchers regarding the issues raised, foreign aid continued to play an important role in developing countries, especially in sub Saharan African countries. Foreign aid affects the economic growth through different ways of which the impact on government expenditure is one of them. The empirical analysis on this area is not well researched in Ethiopia. This study tries to fill the gap and uses latest and more detailed data.The study primarily assess relationship of foreign aid and the government expenditures and tries to look the case of fungibility by dis aggregating non developmental sectors expenditures and developmental sectors in aggregate.The empirical results indicate that the flow of foreign aid does influence government spending patterns.Capital expenditure is positively and significantly affected by foreign Aid and also Foreign Aid finances Non- developmental Expenditures.

Enlightened Aid
Enlightened Aid

Author: Amanda Kay McVety

Publisher: Oxford University Press

Published: 2015

Total Pages: 308

ISBN-13: 0190257784

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Enlightened Aid examines the intellectual and political origins of Point Four, the first American aid program for the developing world, and the economic and diplomatic implications of its operations in Ethiopia.

Dead Aid
Dead Aid

Author: Dambisa Moyo

Publisher: Macmillan

Published: 2009-03-17

Total Pages: 209

ISBN-13: 0374139563

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Debunking the current model of international aid promoted by both Hollywood celebrities and policy makers, Moyo offers a bold new road map for financing development of the world's poorest countries.

Assessing Aid
Assessing Aid

Author:

Publisher: World Bank Publications

Published: 1998

Total Pages: 164

ISBN-13: 9780195211238

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Assessing Aid determines that the effectiveness of aid is not decided by the amount received but rather the institutional and policy environment into which it is accepted. It examines how development assistance can be more effective at reducing global poverty and gives five mainrecommendations for making aid more effective: targeting financial aid to poor countries with good policies and strong economic management; providing policy-based aid to demonstrated reformers; using simpler instruments to transfer resources to countries with sound management; focusing projects oncreating and transmitting knowledge and capacity; and rethinking the internal incentives of aid agencies.