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This paper is a contribution to the literature on aid and growth. Despite an extensive empirical literature in this area, existing studies have not addressed directly the mechanisms via which aid should affect growth. We identify investment as the most significant transmission mechanism, and also consider effects through financing imports and government consumption spending. With the use of residual generated regressors, we achieve a measure of the total effect of aid on growth, accounting for the effect via investment. Pooled panel results for a sample of 25 Sub-Saharan African countries over the period 1970 to 1997 point to a significant positive effect of foreign aid on growth, ceteris paribus. On average, each one percentage point increase in the aid/GNP ratio contributes one-quarter of one percentage point to the growth rate. Africa's poor growth record should not therefore be attributed to aid ineffectiveness. Copyright © 2005 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Investment is a crucial factor determining economic performance at the firm as well as the country level. In this paper I identify the determinants of the decision to invest in new plant and equipment as well as the determinants of the level of such investment for a sample of firms in 19 sub-Saharan African countries. In particular, I concentrate on the role of property rights, external finance, trade status and firm ownership on investment. Results indicate that internationally trading firms, foreign owned firms and firms with better access to sources of external finance tend to be more likely to invest and to invest more, with little role for indicators of property rights in influencing investment decisions found. [ABSTRACT FROM AUTHOR]

Beginning from the early 1980s countries in Sub-Saharan Africa embarked on financial liberalization policies with a view to reversing the ill-effects of financial repression. This paper provides a survey of financial liberalization in Sub-Saharan African countries over the period 1980 to 2004. Our review of empirical studies showed that financial liberalization has had diverse and contrasting effects on savings, investment and economic growth. Most studies found a significant positive effect of financial liberalization on investment whereas its effect on savings has been largely insignificant. The evidence on the effect on economic growth is inconclusive as different studies find contrasting results. It is found that financial liberalization policies have not had the desired and expected results as both financial and macroeconomic variables have not improved following financial liberalization in these countries. This calls for a rethinking of financial liberalization in Sub-Saharan African countries. It is important that financial liberalization is carried out in a stable macroeconomic environment. In addition to this, there should be a building and reform of institutions and the strengthening of prudential regulation. Following this, financial liberalization can be embarked upon but it must be properly sequenced and not rushed. [ABSTRACT FROM AUTHOR]

Using a recent public expenditure dataset, this article proposes a 'reality check' of the level and composition of input subsidies in nine African countries between 2006 and 2013. Results show that input subsidies (1) received close to 35% of agricultural-specific expenditure on average and (2) cover a variety of interventions, including investments in capital, such as on-farm irrigation, and in on-farm services, such as inspection or training. Further, the figures show that input subsidies tended to become entrenched in agricultural budgets over time, leading to sub-optimal execution rates, and were primarily funded by the national taxpayer, while donors invested more in public goods. Findings confirm that input subsidies crowded out other spending categories likely to be more supportive of long-term agricultural development objectives. The article concludes that the political economy of input subsidies should be directed to making more concrete efforts to attain a better balance of public expenditure on agriculture. Furthermore, policy-makers should aim to increase the efficiency and policy coherence of input subsidies, since merely abolishing them is likely to be unfeasible in the short term. [ABSTRACT FROM AUTHOR]

Scholars have struggled to understand the role of investment in the slow growth of post-Independence sub-Saharan Africa. Existing research has largely relied on national accounting data, which suggests low returns on investment in the region. This article uses data gathered during fieldwork to investigate the quality of the investment data in the national accounts of Nigeria, Africa's most populous economy. It proposes a new investment series which can be compared to those in Nigeria's national accounts for 1976-85. It provides an alternative view of investment and productivity during the country's crucial oil boom period, when Nigeria had significant funding available for investment but this investment did not result in long-term economic growth. Data are drawn from construction surveys, publicly listed and privately held construction company financial records, and industry publications. The new series suggests that for many years of the oil boom, approximately twothirds of what was recorded as having been investment in Nigeria's national accounts was not investment at all. Much of this was 'ghost construction', projects paid for but never completed. This indicates that actual investment was far more productive than has previously been appreciated. [ABSTRACT FROM AUTHOR]