Impact of foreign aid to agriculture sector on agricultural productivity in developing countries in the context of second goal of SDGs

Abstract

In order to achieve the objectives of Sustainable Development Goals in the context of agriculture and food availability to everyone, the role of aid stands critical. The study will examine the impact of agriculture aid on average and at different quintiles of productivity level in low income and lower middle income countries (77 developing countries) during the period of 2002 to 2014. The agricultural productivity is taken as dependent variable and the explanatory variables include agricultural aid (main variable of interest), agricultural population, agricultural land, drought, primary gross enrolment, gross capital formation, gross fixed capital formation (in agriculture sector) and government’s policy effectiveness during the period from 2002 to 2014. The estimated results show the positive and significant relationship between agriculture aid and productivity. However, the policy indicators have revealed negative but insignificant association with the dependent variable. The study suggests that the donor agencies have to increase the agricultural aid by 126 percent to get the double agricultural productivity by the year 2030 from the current average aid level of US$44.07 million per year.