Growth and Poverty in Africa: A Spatial Econometrics Perspective
Using dynamic spatial panel data models, I estimate the effect of foreign aid, foreign direct investment, remittances, and real exchange rate undervaluation on growth and poverty in a sample of 41 contiguous African countries over a period of 31 years. Using the Spatial Autoregressive (SAR) and spatial Durbin model (SDM) models as well as two alternative spatial weighting matrices, I find that foreign aid, foreign direct investment, and remittances are growth promoting and poverty reducing. In addition, I find that real exchange rate undervaluation significantly contributes to poverty reduction. These results are robust to the measure of poverty, the time coverage of the data, the choice of spatial weighting matrix, and the type of dynamic spatial panel data model. This evidence indicates that foreign aid, foreign direct investment, remittances, and the real exchange rate can be used as policy tools in the fight against poverty. F
El Koudouss, El Mechry, "Growth and Poverty in Africa: A Spatial Econometrics Perspective" (2022). ETD Collection for Fordham University. AAI28965303.