Does Leveraging International Financial Flows a Key Driver for Growth in East Africa Region?

Abstract

This study aims to investigate whether international financial flows serve as a significant driver of growth in the East African region.  Utilizing Fixed Effect (FE) panel data estimation for Kenya, Uganda, Tanzania, Rwanda, and Burundi spanning the period from 1990 to  2021, the empirical results reveal a positive and statistically significant relationship between official development assistance per capita  and the growth rate of gross domestic product (GDP) in the East African region. Furthermore, trade openness and inflation rates appear  to exhibit a negative relationship with GDP in the region. Conversely, population growth in East African countries shows a positive  relationship with GDP growth in the region. The study recommends prioritizing and increasing investments in official development assistance, urging East African governments and international organizations to continue allocating resources towards development  projects aimed at fostering economic growth. Policymakers are advised to concentrate on enhancing the efficiency and effectiveness of  utilizing official development assistance, ensuring that funds are directed towards sectors with high growth potential such as  infrastructure, human capital, and entrepreneurship. Additionally, the study emphasizes the importance of strengthening partnerships  between donors and recipient countries and promoting transparency and accountability in the allocation and implementation of official  development assistance initiatives.