The Effects of Foreign Aid on Human Development in Cameroon
Chapter One
Objective of the study
The objectives of the study are;
- To examine the effectiveness of foreign aid in improving healthcare outcomes in Cameroon.
- To investigate the impact of foreign aid on the education sector in Cameroon.
- To analyze the role of foreign aid in fostering economic development and poverty reduction in Cameroon.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Foreign aid and its impacts on economic growth
There are diverse views regarding the impact of foreign aid on economic growth by various researchers. While others hold the view that aid has a positive impact on growth, others see aid as having a negative impact and the last group of researchers argue that the effects could be positive or negative depending on several factors The Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD) defines foreign aid in terms of Official Development Assistance (ODA), as government aid to developing countries designed to promote the economic development and welfare of recipient countries. Loans and credits for military purposes are excluded. The aid may be provided bilaterally, from donor to recipient, or it may be channelled through a multilateral development agency such as the United Nations or the World Bank. Aid includes grants, “soft” loans, and the provision of technical assistance. Soft loans are those where the grant element is at least 25%. ODA is usually measured on a net basis, that is, after subtracting loan repayments from the gross aid flows. 12 Papanek (1973), in a cross-country regression analysis of 34 countries, treating foreign aid, foreign investment, other flows and domestic savings as explanatory variables, finds that foreign aid has a greater effect on growth than the other variables. He explains that “aid is supposed to be specifically designed to foster growth and, more importantly, is biased toward countries with a balance-of-payment constraint”. He also finds a strong negative correlation between foreign aid and domestic savings, which he believes co-contributed to the growth performance. Chenery and Carter (1973), following the previous two-gap derived model of Chenery and Strout (1966) and using data from 50 countries over the period 1960-1970, show that the effects of Official Development Assistance (ODA) on the development performance of countries under study are different among certain groups of countries. In five countries, namely Taiwan, Korea, Iran, Thailand and Kenya, foreign assistance accelerated economic growth whereas in six cases it retarded growth, that is, India, Colombia, Ghana, Tunisia, Ceylon and Chile. In a related study, (Singh, 1985) also finds that foreign aid has a strong positive impact on economic growth in less developed countries for the periods 1960-1970 and 1970-1980.He concludes that this is very possible when state intervention is not taken into account. When the state intervention variable is included in the regression, the effect of foreign aid gets statistically weak. Snyder (1993), taking country size into account, finds a positive and significant relationship between aid and economic growth. He emphasizes that, “Previous econometric analysis has not made allowance for the fact that larger countries grow faster, but receive less aid”. He also claims that donors favour small countries for a number of reasons. Based on the model developed by Papanek (1972, 1973) and then extended by Mosley (1980) and Mosley et al. (1987), Snyder analyzes the relation between foreign aid inflow and the growth rate of gross 13 domestic product in 69 developing countries over three periods (the 1960s, 1970s and 1980- 1987), incorporating country size (measured by gross domestic product) in the model. He argues that when country size is not included, the effects of aid are small and insignificant but when this factor is taken into account, the coefficient of aid becomes positive and significant. Fayissa and El-Kaissy (1999), came out with the same conclusion as (Chenery and Strout, 1966), that overseas development assistance accelerates economic growth by supplementing domestic capital formation (economic theory of foreign aid). They conducted a study of 77 countries over sub-periods 1971-1980, 1981-1990 and 1971-1990.The results showed that that foreign aid positively affects economic growth in developing countries. Using modern economic growth theories, they pointed out that foreign aid; domestic savings, human capital and export are positively correlated with economic growth in the studied countries. In general, aid is found to have a positive impact on economic growth because it increases investment, increases the capacity to import capital goods or technology, aid does not have an adverse impact on investment and savings and lastly because aid increases the capital productivity and promotes endogenous technical change (Morrissey, 2001). Although foreign aid is found to have a positive impact on economic growth, Pedersen (1996) in a related study asserted that it is still not possible to conclude that aid affects growth positively. He used the game theory, to demonstrate that the problems lie in the built-in incentive of the aid system itself.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine a the effects of foreign aid on human development in Cameroon. Selected NGOs in Cameroon form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the effects of foreign aid on human development in Cameroon. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the effects of foreign aid on human development in Cameroon
Summary
This study was on the effects of foreign aid on human development in Cameroon. Three objectives were raised which included: To examine the effectiveness of foreign aid in improving healthcare outcomes in Cameroon, to investigate the impact of foreign aid on the education sector in Cameroon and to analyze the role of foreign aid in fostering economic development and poverty reduction in Cameroon. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected NGOs in Cameroon. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, while foreign aid has made notable contributions to human development in Cameroon, ongoing collaboration, adaptability, and a commitment to addressing challenges are essential for ensuring sustainable progress. The study serves as a foundation for informed decision-making, encouraging stakeholders to collectively work towards a future where external assistance complements local efforts, leading to holistic and inclusive human development.
Recommendation
Based on the findings of the study on the effects of foreign aid on human development in Cameroon, several key recommendations emerge. These recommendations are designed to inform policy decisions, guide international cooperation, and contribute to the ongoing efforts to enhance sustainable and inclusive development in the country:
- Collaborate with international partners to invest in training healthcare professionals and improving medical facilities, contributing to the long-term sustainability of healthcare interventions.
- Encourage partnerships between educational institutions, local communities, and international organizations to create sustainable programs that enhance educational outcomes for all.
- Collaborate with international donors to support initiatives that promote entrepreneurship, job creation, and the development of sustainable industries, particularly in rural areas.
- Collaborate with international organizations to provide technical assistance and capacity-building programs aimed at improving governance practices and reducing corruption.
- Engage with local communities in the decision-making process to foster a sense of ownership and empower communities to actively participate in development initiatives.
References
- Bourguignon, F. and C. Morrison, 1998. “Inequality and development: the role of dualism”, Journal of Development Economics, vol. 57, pp. 233-257.
- Burnside, Craig and Dollar, David (1997). “Aid, Policies and Growth.” The American Economic Review-, 90(4), 847-868
- Burnside, Craig and Dollar, David (1998). “Aid, the Incentive Regime, and Poverty Reduction”. Policy Research Working Paper 1937. World Bank, Development Research Group, Washington D.C.
- Chenery, Hollis B. and Carter, Nicholas G. (1973). “Foreign Assistance and Development Performance, 1960-1970.” American Economic Association, Vol.63, No.2
- Fayissa, Bichaka and El-Kaissy, Mohamed I. (1999). “Foreign Aid and Economic Growth of Developing Countries (LDCs): Further Evidence.” Studies in Comparative International Development
- Gomanee, K. and O. Morrissey, 2002. “Evaluating aid effectiveness against a poverty reduction criterion”, DESG Conference Paper, Nottingham, April 2002.
- Jones, Charles .I. (2002).Introduction to Economic Growth, 2nd edition .Norton and company New York
- Knack, Stephen (2000). “Aid Dependence and the Quality of Governance: A Cross-Country Empirical Analysis.” World Bank Policy Research
- Paper Le, T.H. and P. Winters, 2001. “Aid policies and poverty alleviation: the case of Viet Nam”, Asia-Pacific Development Journal, vol. 8, No. 2, pp. 27-44.
- Papanek, G. (1972). “The Effect of Aid and Other Resource Transfers on Savings and Growth in Less Developed Countries.” Economics Journal 82
