The Impact of Foreign Aid on Economic Growth in Morocco: Econometric Analysis Using VECM

Kawthar Aghoutane, Mohamed Karim

Abstract


The present work aims to contribute to the empirical literature on the effectiveness of Foreign aid in Morocco. We use the Vector Error Correction Model (VECM) to jointly capture the long-run relationship and short-run dynamics between Official Development Assistance and economic growth. Other variables such as investment, exports, and government consumption are also included in the model. The results indicate that the foreign aid promotes growth through government consumption in the short term. However, the impact of aid on economic growth becomes negative in the long term.

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DOI: https://doi.org/10.5539/ijef.v9n5p87

Copyright (c) 2017 Kawthar Aghoutane, Mohamed Karim

License URL: http://creativecommons.org/licenses/by/4.0

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)  Email: ijef@ccsenet.org

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