This study has examined sectoral analysis of the impact of foreign aid on aggregate and sectoral economic growth in Ethiopia over the period 1981 to 2012 using multivariate Vector auto regression analysis. All the necessary time series tests such as stationary test, co-integration test, weak exiguity test, vector error correction, and causality test in vector error correction model and the like are conducted. The empirical result from the growth equation shows that aid has a significant positive impact on educational sector GDP in the long run. On the other hand, foreign aid has positive but insignificant impact on real GDP, agriculture GDP, and health sector GDP of Ethiopia. Foreign aid is effective in enhancing growth at aggregate level of the economy in general and education sector of the economy of Ethiopia in particular. The test result of the study result reveals that there is a bi-directional causal relationship between educational GDP and educational foreign aid in Ethiopia. However, the agricultural and health sector does not show any bi-directional causality with their respective sector aid. This implies that all aid allocated for sectors is ineffective all in all in achieving its objectives of economic development. Therefore, aid recipient country like Ethiopia has to work how to enhance the domestic revenue raising capacity of the country which is at the heart of the mechanism to meet the capital required for the economy in times of short falls and ineffectiveness of external resources.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER ONE: INTRODUCTION
- 1.1. Background
- 1.2. Statement of the Problem
- 1.3. Objective of the Study.
- 1.3.1. General Objectives
- 1.3.2. Specific Objectives
- 1.4. Research Questions.
- 1.5. Hypothesis to be tested..
- 1.6. Significance of the Study......
- 1.7. Scope and Limitation of the Study
- 1.7.1. Scope of the Study.
- 1.7.2. Limitation of the Study..
- 1.8. Organization of the Paper...
- CHAPTER TWO: METHODOLOGY OF THE STUDY
- 2.1. Data Types and Sources
- 2.2. Description of Variables..
- 2.3. Model Specification.......
- 2.4. Econometric Estimation Techniques.
- 2.4.1. Testing for Unit Root..
- 2.4.2. Test for Cointegration
- 2.4.3 Vector Error Correction Model
- 2.4.4 Causality Test in Vector Error Correction Model
- CHAPTER TREE: RESULT AND DISCUSSION..
- 3.1. Descriptive Analysis of Macroeconomic Performance in Ethiopia
- 3.1.1. Analysis of Aggregate Economic Growth in Ethiopia. ...........
- 3.1.2. Sector Wise Analysis of Economic Growth in Ethiopia
- 3.1.3. Trends of Domestic Savings and Investment in Ethiopia....
- 3.1.4. Trends of External Sector Economic Growth in Ethiopia.
- 3.1.5. Government Expenditure and Economic Growth............
- 3.1.6. Foreign Aid (ODA) and Economic Growth in Ethiopia............
- 3.1.7. Sectorial Composition of Foreign Aid (ODA) in Ethiopia....
- 3.2. Empirical Results Analysis and Interpretations...
- 3.2.1. Results for Unit-Root Test
- 3.2.2. Co-integration and Long run Growth Equation Analysis..
- 3.2.3. Short Run VECM Estimation of Economic Growth.
- 3.2.4. Causality Analysis of Aggregate and Sectoral Economic Growth.
- CHAPTER FOUR: SUMMARY AND CONCLUSION
- 4.1. Summary
- 4.2. Conclusion.......
- 4.3. Policy Implication
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis analyzes the impact of foreign aid on economic growth in Ethiopia, with a specific focus on the agriculture, education, and health sectors. The study aims to understand the relationship between foreign aid and economic growth in each of these sectors and identify key drivers of growth. Key themes include:- The impact of foreign aid on aggregate and sectoral economic growth in Ethiopia
- The relationship between foreign aid and domestic savings, investment, and government expenditure
- The role of foreign aid in promoting growth in the agriculture, education, and health sectors
- The long-run and short-run effects of foreign aid on economic growth
- The challenges and opportunities associated with foreign aid in Ethiopia
Zusammenfassung der Kapitel (Chapter Summaries)
- **Chapter One: Introduction** - This chapter provides an overview of the study, its objectives, and research questions. It outlines the importance of foreign aid for economic development in Ethiopia and highlights the specific challenges faced by the country. The chapter also discusses the scope and limitations of the study.
- **Chapter Two: Methodology of the Study** - Chapter Two describes the data and methodologies used in the study. It explains the selection of variables, the model specification, and the econometric techniques employed to analyze the relationship between foreign aid and economic growth. The chapter also discusses the limitations of the chosen methods.
- **Chapter Three: Result and Discussion** - This chapter presents the results of the empirical analysis. It examines the descriptive statistics of macroeconomic variables in Ethiopia and analyzes the trends in aggregate and sectoral economic growth. The chapter then examines the relationship between foreign aid and economic growth, including the effects of foreign aid on domestic savings, investment, and government expenditure. The chapter also explores the role of foreign aid in promoting growth in specific sectors.
Schlüsselwörter (Keywords)
This thesis examines the impact of foreign aid on economic growth in Ethiopia, focusing on the agriculture, education, and health sectors. Key terms include foreign aid, economic growth, sectoral analysis, Ethiopia, development economics, econometric models, unit root tests, cointegration analysis, vector error correction model (VECM), and causality tests.- Arbeit zitieren
- Fikadu Goshu (Autor:in), 2014, Sectoral Analysis of the Impact of Foreign Aid on Economic Growth in Ethiopia. The Case of Agriculture, Education and Health Sectors, München, GRIN Verlag, https://www.grin.com/document/281966
