Empirical Investigation into the Determinants of Foreign Aid in Sahel Countries: A Panel Bayesian Model Averaging Approach

ABSTRACT

This paper introduces model uncertainty into the empirical study on the determinants of foreign aid at the regional level. This is done by adopting a panel Bayesian model averaging approach applied on the data of 10 Sahel countries spanning from 1985 to 2017. Our results suggest that, among the regressors considered, those reflecting trade stakes including arm imports, institutional conditions and socioeconomic prospects tend to receive high posterior inclusion probabilities. These findings are robust to changes in the model specification and sample composition and are not meaningfully affected by the linear panel data model applied. The results highlight three concerns that justify aid flows towards Sahel countries: (i) interest of donors (self-interest), (ii) recipient economic needs and (iii) security purposes. The paper recommends Sahel countries to strengthen international cooperation for security and peace in compliance with the 13th goal of the Agenda 2063 of the African Union.

KEYWORDS:

• Bayesian Model Averaging
• foreign aid
• instability
• security and peace
• Sahel

JEL CLASSIFICATION:

• C11
• F35
• F51
• H56
• P16

Acknowledgments

The author of this paper acknowledges the immense support from the International Food Policy Research Institute (IFPRI_Dakar, Senegal) and the West African Economic and Monetary Union (WAEMU) Commission (Ouagadougou, Burkina Faso) for the financial support and opportunity as a Visiting Research Scholar at the Department of Economic Policies and Domestic Taxation of the WAEMU Commission that culminated into this study. In addition, he would like to thank the United Nations Economic Commission for Africa (UNECA) for the use of their facilities during the completion of this paper as a Research Fellow with the Macroeconomic and Governance Division (MGD) of the UNECA, Addis Ababa, Ethiopia. However, the views expressed are those of the author and do not represent that of the United Nations (UN) nor the WAEMU and the IFPRI. Thanks to Fousseini Traore (IFPRI-Dakar), Kodjo Evlo, Akoété Ega Agbodji and Kodjo Wobatolgma Baoula  (University of Lomé, Togo), Aly Diadjiry Coulibaly, Souleymane Diarra and Eloge Houessou (WAEMU Commission), Muazu Ibrahim (Ghana) and Milly Chepkorir Chebochok (Kenya) for their comments. Finally, the author is very grateful to the anonymous reviewers and the Editor-in-Chief of the Defence and Peace Economics, whose comments have greatly improved this paper.

Availability Of Data And Materials

The datasets generated and/or analysed during the current study are available at the World Bank website: https://databank.worldbank.org/home.aspx; the IAB brain-drain data on international migration website: https://www.iab.de/en/daten/iab-brain-drain-data.aspx; Stockholm International Peace Research Institute (SIPRI) website: https://www.sipri.org/databases; the International Country Risk Guide website: https://epub.prsgroup.com/products/icrg-historical-data; World Governance Indicator (WGI) website: https://info.worldbank.org/governance/wgi/Home/Reports and the Freedom House link: https://freedomhouse.org/report/freedom-world.

Furthermore, the datasets used and/or analysed during the current study are available from the corresponding author on reasonable request.

Disclosure Statement

The author wishes to confirm that there are no known conflicts of interest associated with this publication.

Notes

1. this paper is focusing on the list of ten (10) sahel countries defined by united nations (un), african union (au). the list includes burkina faso, cameroon, chad, gambia, guinea, mauritania, mali, niger, nigeria and senegal (https://www.un.org/africarenewal/sahel).

2. Terrorist groups from al qaeda in the islamic maghreb, boko haram in the lake chad basin, etc.

3. The reader interested in their further derivation as well as the derivation of bma formulas might refer to the papers which incorporate this technique, such as Fragoso, bertoli, and louzada (2018), Moral-benito (2015) and Próchniak and witkowski (2014). there also exist numerous other papers, which make use of it in different fields (Bayale 2020a, forthcoming; Sanso-navarro and vera-cabello 2018; Okafor and piesse 2017).

4. The choice of this test is justified by the fact that we are dealing with an unbalanced panel.

Additional information

Funding

This work was supported by the West African Economic and Monetary Union (WAEMU) Commission under Doctoral Research Stay Program 001/2016-2018/WAEMU.