Is Aid Really Dead? Evidences from Sub-Saharan Africa

This study examined the relationship between foreign aid and economic development in Sub Saharan Africa. The study seeks to examine the role of institutions in aid effectiveness in SSA countries by adopting a theoretical framework similar to the Endogenous/New Growth model and the System Generalized Method of Moments (GMM) technique of estimation in order to overcome the challenge of endogeneity perceived in the institution variables and Aid-Growth argument. It was observed that foreign aid does not significantly influenced Real GDP Per Capita in Sub-Saharan Africa, even after controlling for adequate rule of law and sound public institutions. In the same manner; capital stock, rule of law, control of corruption and Human capital enhanced economic performance while foreign aid failed to contribute meaningfully to economic development in SSA Countries.