wow-inequalities/02-data/intermediate/wos_sample/b5e19ab19243173c2feb137711030c74-akobeng-eric/info.yaml

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abstract: 'Purpose This paper examines the relationship between foreign aid,
institutional democracy and poverty. The paper explores the direct
effect of foreign aid on poverty and quantifies the facilitating role of
democracy in harnessing foreign aid for poverty reduction in Sub-Saharan
Africa (SSA). Design/methodology/approach The paper attempts to address
the endogenous relationship between foreign aid and poverty by employing
the two-stage least squares instrumental variable (2SLS-IV) estimator by
using GDP per capita of the top five Organization for Economic
Co-operation and Development (OECD) countries sending foreign aid to SSA
countries scaled by the inverse of the land area of the SSA countries to
stimulate an exogenous variation in foreign aid and its components. The
initial level of democracy is interacted with the senders'' GDP per
capita to also instrument for the interaction terms of democracy,
foreign aid and its components. Findings The results suggest that
foreign aid reduces poverty and different components of foreign aid have
different effects on poverty. In particular, multilateral source and
grant type seem to be more significant in reducing poverty than
bilateral source and loan type. The study further reveals that
democratic attributes of free expression, institutional constraints on
the executive, guarantee of civil liberties to citizens and political
participation reinforce the poverty-reducing effects of aggregate
foreign aid and its components after controlling for mean household
income, GDP per capita and inequality. Research limitations/implications
The methodological concern related to modeling the effects of foreign
aid on poverty is endogeneity bias. To estimate the relationship between
foreign aid, democracy and poverty in SSA, this paper relies on a
2SLS-IV estimator with GDP per capita of the top five aid-sending OECD
countries scaled by the inverse of land area of the SSA countries as an
external instrument for foreign aid. The use of the five top OECD''s
Development Assistance Committee (OECD-DAC) countries is due to the
availability of foreign aid data for these countries. However,
non-OECD-DAC countries such as China and South Africa may be important
source of foreign aid to some SSA countries. Practical implications The
findings further suggest that the marginal effect of foreign aid in
reducing poverty is increasing with the level of institutional
democracy. In other words, foreign aid contributes more to poverty
reduction in countries with democratic dispensation. This investigation
has vital implications for future foreign aid policy, because it alerts
policymakers that the effectiveness of foreign aid can be strengthened
by considering the type and source of aid. Foreign aid and quality
political institution may serve as an important mix toward the
achievement of the Sustainable Development Goals 2030 and the Africa
Union Agenda 2063. Social implications As the global economy faces
economic and social challenges, SSA may not be able to depend heavily on
foreign partners to finance the region''s budget. There is the need for
African governments to also come out with innovative ways to mobilize
own resources to develop and confront some of the economic challenges to
achieve the required reduction in poverty. This is a vision that every
country in Africa must work toward. Africa must think of new ways of
generating wealth internally for development so as to complement foreign
aid flows and also build strong foundation for welfare improvement,
self-reliance and sustainable development.
Originality/value This existing literature does not consider how
democracy enhances the foreign aid and poverty relationship. The
existing literature does not explore how democracy enhances grants,
loans, multilateral and bilateral aid effectiveness in reducing poverty.
This paper provides the first-hand evidence of how institutional
democracy enhances the poverty-reducing effects of foreign aid and its
components. The paper uses exogenous variation in foreign aid to
quantify the direct effect of foreign aid and its components on poverty.'
affiliation: 'Akobeng, E (Corresponding Author), Lancaster Univ Ghana, Dept Business
Studies, Accra, Ghana.
Akobeng, Eric, Lancaster Univ Ghana, Dept Business Studies, Accra, Ghana.'
author: Akobeng, Eric
author-email: e.akobeng@lancaster.edu.gh
author_list:
- family: Akobeng
given: Eric
da: '2023-09-28'
doi: 10.1108/JES-05-2019-0225
earlyaccessdate: APR 2020
files: []
issn: 0144-3585
journal: JOURNAL OF ECONOMIC STUDIES
keywords: Democracy; Poverty; Foreign aid
keywords-plus: 'POVERTY REDUCTION; DOMESTIC SAVINGS; GROWTH; REMITTANCES; POLICIES;
INEQUALITY; ASSISTANCE; IMPACT'
language: English
month: OCT 26
number: '7'
number-of-cited-references: '67'
pages: 1689-1710
papis_id: 9672336f473d48f5accafcbf54f30ffb
ref: Akobeng2020harnessingforeign
times-cited: '3'
title: 'Harnessing foreign aid for the poor: role of institutional democracy'
2023-10-01 08:15:07 +00:00
type: article
2023-09-28 14:46:10 +00:00
unique-id: WOS:000530055200001
usage-count-last-180-days: '5'
usage-count-since-2013: '19'
volume: '47'
web-of-science-categories: Economics
year: '2020'