Complementarity Between Foreign Aid and Financial Development as a Driver of Economic Growth in Selected Emerging Markets

• Authors: Kunofiwa Tsaurai

Title variants

Komplementarność pomocy zagranicznej i rozwoju finansowego jako siła napędowa wzrostu gospodarczego na wybranych rynkach wschodzących

• Languages of publication: EN

Abstracts

EN

This paper studied whether the complementarity between financial development and foreign aid promotes economic growth in selected emerging markets using the panel Fully Modified Ordinary Least Squares (FMOLS) approach, with data ranging from 1994 to 2014. Although (1) aid‑growth and (2) finance‑growth studies have been conclusively dealt with, the role of financial development in the aid‑growth nexus has been hardly researched. Is financial development a channel through which foreign aid positively influences economic growth? The current study seeks to address these issues using selected emerging markets as a case study. The complementarity between foreign aid and financial development (domestic credit provided by the financial sector, domestic private credit provided by banks, outstanding domestic private debt securities and stock market turnover) resulted in a significant positive impact on economic growth. The study, therefore, urges selected emerging markets to implement policies which deepen the financial sector in order to allow foreign aid to positively contribute towards economic growth.

PL

W artykule podjęto próbę odpowiedzi na pytanie czy komplementarność rozwoju finansowego i pomocy zagranicznej przyczynia się do wzrostu gospodarczego na wybranych rynkach wschodzących. Analizy dokonano przy użyciu w pełni zmodyfikowanej metody najmniejszych kwadratów (FMOLS – Fully Modified Ordinary Least Squares), wykorzystując dane z okresu 1994–2014. Co prawda badania dotyczące (1) wzrostu pomocy i (2) rozwoju finansowego były prowadzone, to rola połączonego wpływu rozwoju finansowego i wzrostu pomocy na wzrost gospodarczy praktycznie nie była zbadana. Czy rozwój finansowy stanowi kanał, poprzez który pomoc zagraniczna pozytywnie wpływa na wzrost gospodarczy? Niniejsze badanie stara się podjąć te zagadnienia wykorzystując jako studium przypadku wybrane rynki wschodzące. Komplementarność pomocy zagranicznej i rozwoju finansowego (kredyt krajowy udzielany przez sektor finansowy, krajowy kredyt prywatny udzielany przez banki, się krajowe prywatne dłużne papiery wartościowe i obrót giełdowy) wywarła znaczny pozytywny wpływ na wzrost gospodarczy. Dlatego badania zachęcają wybrane rynki wschodzące do wdrażania polityk sprzyjających pogłębianiu sektora finansowego w celu umożliwienia wzrostu gospodarczego dzięki pozytywnemu oddziaływaniu pomocy zagranicznej.

Keywords

EN

foreign aid; financial development; economic growth; emerging markets

PL

pomoc zagraniczna; rozwój finansowy; rozwój ekonomiczny; rynki wschodzące; pomoc zagraniczna; rozwój finansowy; rozwój ekonomiczny; rynki wschodzące

• Publisher: Uniwersytet Łódzki. Wydawnictwo Uniwersytetu Łódzkiego
• Journal: Comparative Economic Research. Central and Eastern Europe
• Year: 2018
• Volume: 21
• Issue: 4
• Pages: 45-61

Dates

published

2018-12-10

Contributors

author

Kunofiwa Tsaurai

• Ph.D., Associate Professor at the University of South Africa, Department of Finance, Risk Management and Banking, Pretoria, South Africa

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Identifiers

DOI

10.2478/cer-2018-0026