Effectiveness of Program and Project Aid in Sub-Sahara African Countries

다국어 초록 (Multilingual Abstract)

The purpose of this paper is to assess the relative effectiveness of the program (budget support) and project aid modalities in promoting economic development in Sub-Sahara African countries. With the advent of the Sustainable Development Goals (SDGs) in 2016, the financial resources required for their implementation have sharply increased compared to those of the Millennium Development Goals (MDGs), and the pressure to use aid resources effectively will be mounting. One way of using aid resources effectively in the future is to learn from the MDG history a better modality of aid, especially between the program and project aid modalities. This paper, therefore, tests the relative effectiveness of program and project aid modalities for 41 Sub-Sahara Africa countries over the Millennium era (2005-2014), through panel data analysis method selected by using the Hausman test. The results show that program aid promotes economic growth, though it is also shown to have diminishing marginal returns on growth. Project aid on its own has no impact on economic growth; however, when interacted with policy, it negatively affects growth. The study concludes with an elaboration of policy implications and words of caution for the practice of program aid.

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