Aid dependency and economic governance in the EAC Countries, pp. 29-80
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Date
2010-08
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UB, Cahiers du CURDES
Abstract
This study examines the interrelationship between Aid, Aid dependency, good Governance and economic growth in the East African Community (EAC) Countries using a Panel data model with fixed effects for the period of 1996-2006.
Through a Growth Model, we have found that foreign Aid negatively affects economic growth whereas good governance (which we have measured by the Corruption Perception Index as its proxy) positively affects economic performance in EAC countries.
Moreover, the Governance Model has revealed that Foreign Aid and economic performance positively affect good governance in EAC Countries. Good governance seems to have positive impact on aid dependency of the EAC partner states even though the coefficient is not statistically significant. This result suggests that the EAC partner ·states should focus on good governance improvement if they intend to reduce their dependency to external aid and therefore their growth volatility as well.
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NDEREYAHAGA Richard, Aid dependency and economic governance in the EAC Countries, pp. 29-80, Cahiers du CURDES n° 11, Aout 2010.