Official development assistance granted by the EU and economic growth in Sub-Saharan African countries

Abstract

Aid has been extensively debated with regard to its effects on growth of the recipient countries, its efficiency and effectiveness, as well as the donors’ motives for granting it, resulting in a wide array of points of view. This paper is intended to add to the discussion by focusing on the Official Development Assistance (ODA) granted by the EU member states to Sub-Saharan African (SSA) countries. The SSA countries covered in this study are Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mali, Mozambique, Rwanda, Senegal, Sierra Leone, Tanzania, Togo, Uganda, and Zimbabwe. The paper tests and confirms the hypothesis that there is a positive relationship between the ODA granted to SSA countries and the latter countries’ economic growth, keeping everything else constant. A considerable part of this exercise is to identify what factors are needed to be kept constant in order to isolate the effect of ODA on growth.