Document Type

Thesis - Open Access

Award Date

2021

Degree Name

Master of Science (MS)

Department / School

Economics

First Advisor

Joseph Santos

Abstract

In this thesis, I test my central hypothesis that United States government foreign aid flows and FDI flows from anywhere in the world to Sub-Saharan Africa are intertemporally related; thus, I test to what extent FDI flows follow—and, thus, are caused by—aid flows or to what extent aid flows follow—and, thus, are caused by—FDI flows. My panel dataset includes twenty-three Sub-Saharan countries and spans 1991 to 2018. Based on the results of pooled-OLS and panel fixed-effects regressions, and panel Granger causality tests, I show that aid and FDI are intertemporally related. Additionally, Granger-causality is bidirectional: FDI Granger-causes United States government foreign aid and this aid Granger-causes FDI. Two important policy implications follow from my findings. One, evidence that FDI Granger-causes United States government foreign aid reveals a possible geostrategic motive behind the decisions of United States agencies to deploy aid to Sub- Saharan Africa. And two, evidence of bidirectional intertemporal relationships between United States government foreign aid flows and FDI flows could inform policy makers intent on deploying aid or incentivizing FDI as policy instruments to improve economic well-being in recipient countries, based on whether policy makers reason aid or FDI flows are beneficial.

Library of Congress Subject Headings

Investments, Foreign -- Africa, Sub-Saharan.
Investments, American -- Africa, Sub-Saharan.
Economic assistance -- Africa, Sub-Saharan.
Economic assistance, American -- Africa, Sub-Saharan.
United States -- Foreign economic relations -- Africa, Sub-Saharan.
Africa, Sub-Saharan -- Foreign economic relations -- United States.

Number of Pages

77

Publisher

South Dakota State University

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Rights Statement

In Copyright