Effectiveness of Bilateral and Multilateral Official Development Assistance on Economic Growth in CEMAC: An Expansion Variable Analysis Method ()
ABSTRACT
This study investigates the effectiveness of aid in Economic
and Monetary Community of Central Africa (CEMAC) from 1978 to 2010. We use panel
data model and the decomposition of Casetti and Jones to test the linkages between
bilateral and multilateral Official Development Assistance (ODA) and economic growth.
Four main conclusions were drawn: Firstly, the most prominent positive effects come
from the interaction of aid and Foreign Direct Investment. Thus, the interaction
of aid and FDI plays a significantly positive role in economic growth in CEMAC.
This result assumes a form of complementarity between FDI and ODA flows in the subregion.
Secondly, of the four external sources of financing
of the economy, Foreign Direct Investment (FDI) does not play a positive
role in the growth in CEMAC. Thirdly, Economic growth in the sub-region seems to
be more dependent on savings and the trade balance. Fourtly, according to origin
of aid, multilateral aid as well as aid from the Development Assistance Committee
(DAC) or Emerging Countries explains economic growth in CEMAC but its direct effect
on it is negative. We find that of the three aid packages, DAC, emerging or multilateral,
the DAC subsidies contribute the least negatively to growth. Public aid explains
economic growth in CEMAC, but its effect on economic growth is negative; a 1% increase
in ODA would lead to a 3% drop in growth.
Share and Cite:
Amoa, A. (2020) Effectiveness of Bilateral and Multilateral Official Development Assistance on Economic Growth in CEMAC: An Expansion Variable Analysis Method.
Theoretical Economics Letters,
10, 322-333. doi:
10.4236/tel.2020.102022.