Empirical Economic Bulletin, An Undergraduate Journal


I investigate the determinants of foreign aid to Sub – Sahara African countries. I look at the post – Cold War era following Bandyopadhyay and Wall (2007). The independent variables of interest are GDP per capita, infant mortality, population, civil and political rights and also government effectiveness. I control for fixed effects to allow for political, strategic and other reasons donors have and use data from the World Bank from 1995. My results show that in the post-Cold War era, government effectiveness and population are statistically significant in explaining net official and development aid and assistance. A population bias is confirmed as aid per capita falls as population increases. In addition, more effective governments attract more aid, increasing government effectiveness by 1 standard deviation (e.g a bad score of -0.5 to a not great score of about 0.1) increases official aid by around $70 million.