FOREIGN AID AND POVERTY DYNAMICS IN AFRICA

FOREIGN AID AND POVERTY DYNAMICS IN AFRICA

ABSTRACT

The study focuses on foreign aid and poverty dynamics in Africa. Specifically, the study addressed two objectives ;(1) the relationship between poverty and aid and (2) the relationship between mortality rate and aid. Following these objectives, the study used fixed effects estimation techniques for the two objectives, the choice of which was determined empirically using Hausman test. Based on this technique, the following results were arrived at:(1) that the coefficient of official development assistance was significantly positive, suggesting that higher poverty attracts more official development assistance, (2) that the coefficient of expenditure on education is positive, hence high rate of poverty attracts more expenditure on education,(3) that official development assistance rises as a result of increase in the mortality rate ,(4) that higher mortality rate attracts more expenditure on education and(5)that expenditure on health appears not significant in the two models and this implies that expenditure on health does not respond to changes in both the poverty level and the mortality rate. The study therefore recommends for the scaling up of aid to African countries in accordance to the agreements of Monterrey of 2002 and Gleneagles of 2005.