Agricultural Aid and Agricultural Production in Africa

Abstract

ABSTRACT This paper uses panel data and a dynamic common correlated effect estimator to investigate the effects of non-food agricultural aid on agricultural output in African countries during the 1970 to 2018 period. Using five measures of agricultural outputs in per capita terms and controlling for a number of covariates, we find that non-food agricultural aid, at the aggregate level, has positive and statistically significant short- and long-term effects on agricultural output in African countries. Using disaggregated aid data, we also find that several components of non-food agricultural aid have significant positive effects on agricultural output in Africa, while some components of non-food agricultural aid have no significant effect on agricultural output, suggesting that the composition of the aid matters for aid effectiveness. The results are robust to several specifications and different estimation methodologies including estimators that account for cross-sectional dependence. The results of this paper have implications on aid policy and research.