Is foreign aid effective in the food manufacturing sector?

Abstract

Following the inconsistency of the effectiveness of aid based on the total economy and agriculture, this study provides evidence for food manufacturing for developing countries and economies in transition. Using data on 22 developing and 9 transition countries from 1990 to 2019, aid is ineffective independently. However, in the presence of appropriate policies (low inflation and increased trade), aid is effective in the food manufacturing sector for developing countries, transition economies and the combination of the two groups. Economic managers of developing and transition economies must keep down inflation and promote trade as these do not only benefit food manufacturing but have a collateral effect on the wider economy.