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The impact of foreign aid on investment, growth and the exchange rate in West Africa

Uneze, Eberechukwu F (2009) The impact of foreign aid on investment, growth and the exchange rate in West Africa. Doctor of Philosophy (PhD) thesis, University of Kent. (doi:10.22024/UniKent/01.02.94700) (KAR id:94700)


Since the last two to three decades, the economic performance of the African countries has been the focus of global attention. While other developing countries that share similar characteristics are beginning to emerge, Africa is yet to 'take off'. At the regional level, the North and Southern regions have made some progress but West Africa in spite of its deep integration has barely managed to outperform the East and Central regions.

This thesis focuses on the investigation of the relationship between foreign aid and economic performance in West Africa. Using annual data from 1975 to 2005, it examines the impact of foreign aid on private investment, growth, the real effective exchange rate, as well as the nature of the relationship between external debt, private investment and growth in Nigeria.

The first of the main findings of the thesis is that the impact of foreign aid on private investment and growth in West Africa depends on the type of aid. Also, the effect of aid uncertainty on private investment cannot be attributed to aggregate aid, as multilateral aid does not appear to be volatile. Second, the thesis by splitting aid into multilateral and bilateral components, addresses a major issue in the aid-growth debate - the bi-directional causation between aid and growth. Third, based on two recent pooled estimation techniques - the pooled mean group estimator (PMG) and the dynamic fixed effects (DFE), the thesis examined the effect of foreign aid inflows on the real exchange rate - the so-called 'Dutch Disease' hypothesis, relying mainly on the floating aspect of the real effective exchange rate. Finally, using the ARDF approach, we find that official debt of around 40 percent of GDP is not inimical to growth for Nigeria.

Item Type: Thesis (Doctor of Philosophy (PhD))
DOI/Identification number: 10.22024/UniKent/01.02.94700
Additional information: This thesis has been digitised by EThOS, the British Library digitisation service, for purposes of preservation and dissemination. It was uploaded to KAR on 25 April 2022 in order to hold its content and record within University of Kent systems. It is available Open Access using a Creative Commons Attribution, Non-commercial, No Derivatives ( licence so that the thesis and its author, can benefit from opportunities for increased readership and citation. This was done in line with University of Kent policies ( If you feel that your rights are compromised by open access to this thesis, or if you would like more information about its availability, please contact us at and we will seriously consider your claim under the terms of our Take-Down Policy (
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
SWORD Depositor: SWORD Copy
Depositing User: SWORD Copy
Date Deposited: 13 Jan 2023 15:39 UTC
Last Modified: 13 Jan 2023 15:39 UTC
Resource URI: (The current URI for this page, for reference purposes)

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