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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:External Aid: Help or Hindrance to Export Orientation in Africa?
Author:Elbadawi, Ibrahim A.ISNI
Year:1999
Periodical:Journal of African Economies
Volume:8
Issue:4
Period:December
Pages:578-616
Language:English
Geographic term:Africa
Subjects:export promotion
development cooperation
trade policy
Economics and Trade
international relations
Development and Technology
Politics and Government
External link:https://jae.oxfordjournals.org/content/8/4/578.full.pdf
Abstract:This paper contributes to the analysis of the impact of official development aid (ODA) by focussing on the conflict between unsustainable and excessive aid flows, and export competitiveness. As at least some of these flows will be used to finance expenditure on non-tradeable goods and services, there will be a relative price shift in favour of non-tradeables, i.e. an appreciation of the real exchange rate (RER). Analysing the relationship between ODA, RERs and non-traditional exports in Africa, this paper attempts to fill a lacuna in the debate on the effectiveness of aid in Africa. It highlights the role of aid and private capital flows as determinants of the RER, by analysing RER misalignment indexes (RERMIS). A non-traditional export equation serves as an indicator of policy environment of relevance to export performance. Finally, for a sample of African countries, optimum export maximizing thresholds for ODA/GNP ratios are investigated. The paper concludes that Africa must adequately address two immediate policy concerns. First, how to manage a transition to less aid dependence and how to utilize aid flows in this transitional period without undermining export-oriented RER competitiveness. Second, how to participate in the private capital market without risking a destabilizing financial crisis or undermining export-oriented growth through RER appreciation. App., bibliogr., notes, ref., sum.
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