An insight into aid and economic performance under the structural adjustment and heavily indebted poor countries initiative: a case stud

The paper provides a schematic overview of aid in least developed countries and examines the trend and relationship between aid and exports, imports, investment, savings, real exchange rate, government expenditure, debt and growth during the structural adjustment and heavily indebted poor countries initiatives in Ghana. It is found that increase in aid had a positive effect on economic growth, exports, government expenditure, investment, and debt service payments and aid did not displace savings. The negative effect of aid was on the real exchange rate appreciation but this was restrained as it had a small impact on export performance. The debt servicing was reduced during the post heavily indebted poor countries initiative period.  Notwithstanding, Foreign aid has to be a secondary factor to local revenue if Ghana is to achieve sustained growth and poverty reduction.