Aide et Croissance dans les pays de l'Union Economique et Mon{\'e}taire Ouest Africaine (UEMOA) : retour sur une relation controvers{\'e}e

TL;DR

This paper investigates how official development assistance impacts economic growth in WAEMU countries, revealing a non-linear relationship with a specific aid threshold where aid becomes more effective.

Contribution

It identifies a unique aid threshold of 12.74% of GDP, emphasizing the importance of domestic resource mobilization alongside aid for sustainable growth.

Findings

Aid effectiveness increases above 12.74% GDP threshold

Non-linear relationship between aid and growth confirmed

Foreign aid should complement domestic investments

Abstract

The main purpose of this paper is to analyze threshold effects of official development assistance (ODA) on economic growth in WAEMU zone countries. To achieve this, the study is based on OECD and WDI data covering the period 1980-2015 and used Hansen's Panel Threshold Regression (PTR) model to "bootstrap" aid threshold above which its effectiveness is effective. The evidence strongly supports the view that the relationship between aid and economic growth is non-linear with a unique threshold which is 12.74% GDP. Above this value, the marginal effect of aid is 0.69 points, "all things being equal to otherwise". One of the main contribution of this paper is to show that WAEMU countries need investments that could be covered by the foreign aid. This later one should be considered just as a complementary resource. Thus, WEAMU countries should continue to strengthen their efforts in internal resource mobilization in order to fulfil this need.