Foreign aid and economic growth in the developing countries - a  (Page 19/21)

In short, the initiative and strong commitment of local governments is a necessary condition whereasthe appropriate and efficient assistance from donor community is the sufficient condition to make aid work effectively inSub-Saharan Africa.

During the period 1992-2000, foreign aid to South Asian nations has been found to contribute to growth.Surprisingly, the results also show that foreign aid to the studied inland countries has a positive impact on growth. Obviously, otherdeveloping countries can learn from the successful experience of South Asian and inland countries in the study. The intensiveinvestment in human capital in Jordan and Sri Lanka, good policy environment in Benin and Botswana and active role of the donor andNGO community in Bangladesh, Mali and Rwanda provide policymakers a good “food for thought” in aid management. These experiences mightnot necessarily be applicable everywhere but surely they help donors and policymakers in other countries to understand betterabout what make aid work well in developing countries.

Finally, a strong evidence of divergence has been found in the study implying that if the situation remainsunchanged, the income dispersion among developing countries might be further increase in the future.

Table 1. Regressions for sub-period 1975-1991

Notes:* Significant at the 15% level

** Significant at the 10% level

***Significant at the 5% level

Values in parenthesis are t-statistic

Table 2. Regressions for sub- period 1992-2000