Foreign aid and economic growth: A co-integration analysis of eight OIC’s conflicted countries

Foreign aid is aid extended by foreign donors to a receipient country, which may be in a conflict situation, for the purpose of establishing economic cooperation with it in its pursuit of economic growth and development. This study examined the long and short term relationships between foreign aid received by OICcountries (OIC) and other economic variables. The period covered was from 1970 to 2012 for eight OIC’s conflicted countries. Using econometric time series method, the study included Johansen Co-Integration test and Granger Causal test in order to determine the direction of the variables analysed. The findings shed some light on how far foreign aid was effective in helping conflicted countries to achieve their economic development and growth objectives. Foreign aid had significantly helped conflicted countries in managing their economy.