INTERACTION EFFECT OF MAJOR POWER COMPETITION ON THE EFFECTIVENESS OF DEVELOPMENT ASSISTANCE ON INCOME INEQUALITY: IN THE CASE OF EAST AFRICAN IGAD MEMBER COUNTRIES

Abstract

In the current era characterized by globalization and interdependence, foreign aid has emerged as a crucial tool for safeguarding and promoting the national interests of donor countries. Nevertheless, the increasing divergence of national interests of major powers is casting a formidable shadow over the efficacy of foreign aid in mitigating income inequality. This paper seeks to examine the interaction effect of the US-China global power competition on the causal relationship between Development Assistance and income inequality in member states of the Intergovernmental Authority on Development (IGAD). The study Employing a Multiple Moderated Regression and Random Effect Model to analyzes two decades data from eight East African IGAD member states. The findings indicate that the competition for global influence between the United States and China plummets the effectiveness of development assistance, leading to a widening impact on Income Inequality in IGAD member states.