The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries

The Islamic Development Bank (IDB) is the most leading and prominent Islamic multilateral financial and development institution in the Muslim world. Yet, with its foreign aid activities in almost four decades in various parts of the world, especially in the African continent; it is surprising to not...

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Main Author:	Mustafa, Daud
Format:	Thesis
Language:	eng eng
Published:	2012
Subjects:	HC Economic History and Conditions
Online Access:	https://etd.uum.edu.my/3463/1/s91565.pdf https://etd.uum.edu.my/3463/8/s91565.pdf
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id	my-uum-etd.3463
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abdul Razak, Nor Azam
topic	HC Economic History and Conditions
spellingShingle	HC Economic History and Conditions Mustafa, Daud The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
description	The Islamic Development Bank (IDB) is the most leading and prominent Islamic multilateral financial and development institution in the Muslim world. Yet, with its foreign aid activities in almost four decades in various parts of the world, especially in the African continent; it is surprising to note that no empirical study is available on the impact of its foreign aid activities in Africa, particularly the African Muslim Countries (AMCs). The AMCs constitute more than two-third of the member countries of IDB from Africa. Therefore, this study provides empirical evidences from AMCs like Algeria, Egypt, Gambia, Morocco, Nigeria, Senegal, Tunisia and a host of others, on the role of IDB in accounting for growth in these countries spanning 1987-2010 through balanced panel data. Also, this study examined the nature of causality existing between foreign aid and corruption in AMCs. This is in view of the endemic prevalence of corruption in Africa. Hence, Simultaneous Equations Model (SEM) was adopted as the base model; while OLS, 3SLS and Seemingly Unrelated Regressions Estimate (SURE) methods were utilized for its estimation. On the other hand, Autoregressive Distributed Lag (ARDL) approach based on Cointegration and Granger-causality tests were used to estimate for corruption-aid nexus. Evidently, the findings from this study revealed that the foreign aid activities of IDB positively impact on the economic growth of AMCs via investment as the major transmission channel and it thus confirm the aid effectiveness hypothesis. Also, the nature of causality between corruption and foreign aid is both in the short and long-run; and our findings establish that countries like Morocco and Nigeria are victims of corruption trap. Basically, this study is perhaps the first of its kind to empirically investigate the impact of the foreign aid activities of IDB in Africa.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Mustafa, Daud
author_facet	Mustafa, Daud
author_sort	Mustafa, Daud
title	The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
title_short	The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
title_full	The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
title_fullStr	The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
title_full_unstemmed	The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries
title_sort	effectiveness of idb's foreign aid on economic growth : an empirical study of african muslim countries
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2012
url	https://etd.uum.edu.my/3463/1/s91565.pdf https://etd.uum.edu.my/3463/8/s91565.pdf
_version_	1747827578111000576
spelling	my-uum-etd.34632022-06-01T08:16:50Z The Effectiveness of IDB's Foreign Aid on Economic Growth : An Empirical Study of African Muslim Countries 2012-08 Mustafa, Daud Abdul Razak, Nor Azam Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HC Economic History and Conditions The Islamic Development Bank (IDB) is the most leading and prominent Islamic multilateral financial and development institution in the Muslim world. Yet, with its foreign aid activities in almost four decades in various parts of the world, especially in the African continent; it is surprising to note that no empirical study is available on the impact of its foreign aid activities in Africa, particularly the African Muslim Countries (AMCs). The AMCs constitute more than two-third of the member countries of IDB from Africa. Therefore, this study provides empirical evidences from AMCs like Algeria, Egypt, Gambia, Morocco, Nigeria, Senegal, Tunisia and a host of others, on the role of IDB in accounting for growth in these countries spanning 1987-2010 through balanced panel data. Also, this study examined the nature of causality existing between foreign aid and corruption in AMCs. This is in view of the endemic prevalence of corruption in Africa. Hence, Simultaneous Equations Model (SEM) was adopted as the base model; while OLS, 3SLS and Seemingly Unrelated Regressions Estimate (SURE) methods were utilized for its estimation. On the other hand, Autoregressive Distributed Lag (ARDL) approach based on Cointegration and Granger-causality tests were used to estimate for corruption-aid nexus. Evidently, the findings from this study revealed that the foreign aid activities of IDB positively impact on the economic growth of AMCs via investment as the major transmission channel and it thus confirm the aid effectiveness hypothesis. Also, the nature of causality between corruption and foreign aid is both in the short and long-run; and our findings establish that countries like Morocco and Nigeria are victims of corruption trap. Basically, this study is perhaps the first of its kind to empirically investigate the impact of the foreign aid activities of IDB in Africa. 2012-08 Thesis https://etd.uum.edu.my/3463/ https://etd.uum.edu.my/3463/1/s91565.pdf text eng public https://etd.uum.edu.my/3463/8/s91565.pdf text eng public Ph.D. doctoral Universiti Utara Malaysia Abd Karim, M.Z., & Othman, Y. (2005).Does AFTA and China’s entry into WTO affect FDI in ASEAN countries. Asian Academy of Management Journal, 10(1), 37-58. Abdullahi, S. (2009). 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