The Impact of Foreign Aid on Economic Growth in Ethiopia

Course ID
Ethiopian Economics Association (EEA)
Dawit W.


This paper uses as econometric model to examine the interactions among foreign aid, external debit and economic growth. The empirical findings reveal that aid has a positive but insignificant effect on economic growth while investment has a positive significant impact. Since the direct impact of foreign aid is significant, an attempt is, therefore, made to take the analysis further to investigate the impact of foreign aid on investment and imports which are some of the cannels through which aid impacts on growth. The results indicate that there is a positive and significant relationship between foreign aid and investment. However, there is no evidence of overhang and crowding – out effects of debate on investment. The result also reveals that positive and significant relationship between and imports confirm that aid has been filling the foreign exchange gap and meeting the import bill. Foreign aid, therefore, contributes to growth by facilitating greater imports and investment as long as it is backed by conductive government policies

Corporate Author:Gebrehiwot Ageba, Jemal Mohammed and Solomon Tesfay (Editors) , Ethiopian Economic Association(EEA) , Department of Economics of AAU & Fredrich Ebert Stifung
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors:Aid effectiveness; Economic growth – external debit

Secondary Descriptor:Debt (1970 – 99); Economic performance(1980 – 98)

Geographic Descriptors:Ethiopia
Cataloge Date:02/27/2013
Broad Subject heading:Foreign aid influence – Ethiopia
Call Number:338.963 PRO 2002
Serial Key Title:Proceedings of the Eleventh Annual conference on the Ethiopian economy
Publication catagory:Annual conference
Content type:EEA Publication
Publication date:2013-12-27 00:00:00
Forum or Discussion date:2013-02-27 00:00:00
Conference Place:Nov. 2-4, 2001, Nazareth, Ethiopia
PDF file: Dawit and Yemesrach_The impact of foreign aid on economic growth in Ethiopia.pdf
Place of publication: Addis Ababa, Ethiopia
Type of material:Book
Current frequency: Annualy
Thematic area: Policy Reform, Implementation and outcome in Ethiopia
Author: Dawit W.& Yemisrach A