The Impact of China’s Aid on Zambia’s Economic Growth: An ARDL Technique

Abstract

Theory suggests that aid holds a more vibrant role to the host nation’s economic performance, as it contributes to profitability gains and technological spill-overs. It is from the just highlighted hypothesis that this study opted to outline possible consequences of China’s aid on Zambia’s economic growth during the 1991 to 2018 period. To draw conclusions over the subject matter, the study resorted to utilising the Autoregressive Distributed Lag Model (ARDL) which connected the explained variable to four explanatory variables. Having held other factors that could influence Zambia’s GDP constant, three of the indicators for China’s aid exhibited positive effects in the long-run. On the contrary, an indicator for Chinese militia assistance did not pose positive outcomes. Thus, the study concluded by strongly recommending for a reduction in the application of the military financial assistance from China by the Zambian Government because such support diminished the growth of Zambia’s GDP during the study period.

Keywords: Aid, GDP, Economic growth.

DOI: 10.7176/JESD/10-14-11

Publication date:July 31^st 2020