An Economic and Social Impact of International Aid at National Level: Application of Spatial Panel Model

Abstract

This study identifies how aid has contributed to economic and social development in recipient African countries. Spatial panel models were employed for the analysis, considering spatial autocorrelation of panel data between 42 countries and nine years from 2005 to 2013. Based on the regression results, the aid itself had a weak impact on recipients’ GDP per capita and Human Development Index. On the other hand, according to the interaction term, aid promoted economic and social development along with affirmative government efficiency. The efficient and centralized administrative system and civic accountability also improved the aggregated well-being level in Africa.