Foreign Aid and Agricultural Productivity in Senegal

Abstract

This study examines the relationship between foreign aid and agricultural productivity in Senegal from 1985 to 2020. Using annual time series data and STATA software, the analysis combines the Autoregressive Distributed Lag (ARDL) model with the Error Correction Model (ECM) to capture both short- and long-term dynamics. Findings from the ECM indicate that foreign aid has a positive and statistically significant impact on agricultural productivity at the 1% significance level, but only in the long term. This suggests that an increase in foreign aid allocations leads to higher agricultural productivity over time. Rainfall also positively and significantly affects agricultural productivity in Senegal, both short- and long-term, at a 5% significance level. In contrast, price inflation negatively and significantly impacts agricultural productivity in the short term, with a 5% significance level. The size of the rural population positively and significantly influences agricultural productivity in the short term, at a 10% significance level. Finally, the share of cultivated land relative to the national territory has a negative and significant effect on agricultural productivity in the short term, at the 1% level. Additionally, the lagged share of cultivated land negatively affects agricultural productivity, with significance at the 5% level.