Publication Date:September, 2010
JEL Classification: E22; F35; C33
Key words: Foreign Aid; Investment; Fixed Effects
Document Size: 24 pages
Drawing on the vast literature on aid allocation this paper examines whether foreign aid has anyimpact on private investment in West Africa when other determinants of private investment aretaken into account. Following from this, the paper investigates whether multilateral aid andbilateral aid affect private investment differently. In a related analysis the paper examines theimpact of aid uncertainty on private investment. The results show that multilateral aid affectsprivate investment positively, but not bilateral aid, and uncertainty, measured as the coefficientof variation has a negative impact on private investment and therefore reduces the impact of aidon domestic private investment.