Aid and Dutch Disease in Sub-Saharan Africa

Aid and Dutch Disease in Sub-Saharan Africa

Author: 
Fielding, David
Publisher: 
Oxford University Press (OUP)
Date published: 
2013
Record type: 
Region: 
Responsibility: 
Gibson, Fred, jt. author
Journal Title: 
Journal of African Economies
Source: 
Journal of African Economies, Vol. 22, No. 1, January 2013, pp. 1-21
Abstract: 

International aid has an ambiguous effect on the macroeconomy of the recipient country. To the extent that aid raises consumer expenditure, there will be some real exchange rate appreciation and a shift of resources away from traded goods production and into non-traded goods production. However, aid for investment in the traded goods sector can mitigate this effect. Also, a relatively high level of productivity in the non-traded goods sector combined with a high level of investment will tend to depreciate the real exchange rate. We examine aid inflows in twenty-six Sub-Saharan African countries and find a variety of macroeconomic responses. Some of the variation in the responses can be explained by variation in observable country characteristics; this has implications for donor policy.

Language: 

CITATION: Fielding, David. Aid and Dutch Disease in Sub-Saharan Africa . : Oxford University Press (OUP) , 2013. Journal of African Economies, Vol. 22, No. 1, January 2013, pp. 1-21 - Available at: http://library.au.int/aid-and-dutch-disease-sub-saharan-africa-10