The Effect of Foreign Aid in Promoting Economic Growth in Zambia (1986 - 2018)

Master's Thesis from the year 2019 in the subject Economics - Case Scenarios, University of Lusaka (University of Lusaka UNILUS), course: Economics and Finance, language: English, abstract: This research study has analyzed the effects of foreign aid in promoting economic growth in Zambia. The study used available data in Zambia from 1986 - 2018. The study adopted the ARDL model for investigating the short and long time relationship between foreign aid and Gross Domestic Product GDP. The hypothesis of foreign aid having an effect on economic growth was explored and examined. This study sought to archive the following objectives: To establish whether there is a connection between foreign aid and economic growth in Zambia and determine whether foreign aid significantly contributed to Zambia's economic growth in the period under review. For policy implications, this study also analyzed the determinant of economic growth in Zambia over the same period. The results clearly revealed a positive relationship between foreign aid and Zambia's economic growth in a given period that was under investigation. The findings in this study affirm that foreign aid may be important in promoting economic growth. This study also asserts that foreign aid may be effective in improving the quality and lives of people if used effectively. Thus, the outcome of this study recommends that foreign aid be directed towards the promotion of investment because its proper use can promote and boots the country's economic growth. For policy implications, this study also found that independent variables such as Foreign Direct Investment FDI, Population Growth, Government Expenditure and Consumer Price Index as important and determinants of economic growth in Zambia over the same period. Thus, this study found that important drivers of economic growth included foreign aid inflow, population growth, investment whilst government expenditure and inflation affected GDP negatively, thus their impact was insignificant and negligible. This study furthers found efficiency and effectiveness of programs by government supported by foreign aid being effective to promote growth, hence, the reason why it is important for traditional donors to support government in many sectors.

Daniel Tonga is an award-winning journalist, economist, author, and accomplished communications professional with a proven track record in media and communications. He previously served as Editor, Producer, and Head of the News Department at Prime Television Zambia. Daniel was a contributing researcher to a book, 'An Enterprise Map of Zambia' commissioned by International Growth Centre ICG and London School of Economics which profiles leading industry companies in Zambia. He is the author of a book titled 'Enemies of Truth' and several research papers which have been published by different media and communications journals. As a freelance journalist, Daniel has contributed his work to the world's leading media outlets including Voice of America VOA, France24, Kenya Television Network KTN, Talk Radio 702 among others. He is a fellow of the National Press Foundation in the United States and an alumnus of the International Institute of Journalism IIJ in Germany and Radio Nederlands Training Centre RNTC, in the Netherlands. Daniel holds a Diploma in Journalism, BA Economics, MA in Global Business Journalism, and Masters of Sciences MSc Economics and Finance. He is a practicing Communications Specialist with MultiChoice Group, a South African company that operates the DStv, a major service in Sub-Saharan Africa, and GOtv, a minor service operating in over 9 countries.