The Impact Of Foreign Aid On African Economic Growth

Nowadays, aid has become one of the most important ways for countries to improve their position in the world economic and political stage. Aid is an important diplomatic tool and countries with the assistance of aid to develop relationships with other countries. Since World War II, aid began to rise and countries through a variety of different to aid to African countries. However, after 60 years assistance, Africa’s economy did not get the expected development; Africa is still the world’s poorest and most backward areas. 1980 s, aid effectiveness has become the focus of economists debates, however, after decades of research, academia on aid effectiveness issues still did not reach the same conclusion.In this article, firstly, economic growth theory and the theory of aid were analyzed and summarized, to understand the development process of economic growth theory and the theory of aid. Then, the socio-economic situation of African countries and world aid to Africa were analyzed, in order to understand the level of development of African regions and foreign aid they received. In the section of empirical analysis, the Panel Data from 1980-2013 of 48 countries in Africa was selected, and Two-way fixed effects model was used to study the relationship between aid and economic growth in African countries. The empirical results showed that the impact of aid to economic growth to a large extent can play a role on condition of social and political stability. In the premise of social and political stability of the recipient countries, aid and economic growth showed significantly positive correlation,if not, aid and economic growth didn’t show significantly positive correlation. The result also showed that economic growth showed correlation with industrial structure,foreign direct investment, openness and population.Proposals were put forward to improve forms and policies of aids to African countries on the bases of above analysis and research. It will do some help on aid policy for Africa making by countries and international organizations, and making aid play a better role and improving the development of African region.