Why Aid Does Not Increase Savings Rates in Sub-Saharan Africa


Since the mid-1980s, sub-Saharan Africa has had the lowest savings and investment rates of any region in the world. It has also been the recipient of the highest levels of Official Development Assistance relative to output. Hence, many analysts have been concerned that ODA might be having a negative impact on domestic savings. ODA Results This would be the case if ODA mostly encouraged higher consumption rates, and did little to boost domestic investment. Has this been the case? This One Pager investigates this question (see Serieux, 2009). Most previous analyses of this issue have presumed that aid could be used for either domestic consumption or investment. However, such analysis is incomplete since it also rests on the assumption that all ODA actually stays within the developing country

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