Evaluating the Impact of Official Development Assistance (ODA) on Economic Growth in Developing Countries

Author(s):  
Dang Van Dan ◽  
Vu Duc Binh
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amna Zardoub ◽  
Faouzi Sboui

PurposeGlobalization occupies a central research activity and remains an increasingly controversial phenomenon in economics. This phenomenon corresponds to a subject that can be criticized through its impact on national economies. On the other hand, the world economy is evolving in a liberalized environment in which foreign direct investment plays a fundamental role in the economic development of each country. The advent of financial flows – FDI, remittances and official development assistance – can be a key factor in the development of the economy. The subject of this article is to analyses the effect of financial flows on economic growth in developing countries. Empirically, different approaches have been employed. As part of this work, an attempt was made to use a panel data approach. The results indicate ambiguous effects and confirm the results of previous work.Design/methodology/approachThe authors seek to study the effect of foreign direct investment, remittances and official development assistance (ODA) and some control variables i.e. domestic credit, life expectancy, gross fixed capital formation (GFCF), inflation and three institutional factors on economic growth in developing countries by adopting the panel data methodology. Then, the authors will discuss empirical tests to assess the econometric relevance of the model specification before presenting the analysis of the results and their interpretations that lead to economic policy implications. As part of this work, the authors have rolled panel data for developing countries at an annual frequency during the period from 1990 to 2016. In a first stage of empirical analysis, the authors will carry out a technical study of the heterogeneity test of the individual fixed effects of the countries. This kind of analysis makes it possible to identify the problems retained in the specific choice of econometric modeling to be undertaken in the specificities of the panel data.FindingsThe empirical results validate the hypotheses put forward and indicate the evidence of an ambiguous effect of financial flows on economic growth. The empirical findings from this analysis suggest the use of economic-type solutions to resolve some of the shortcomings encountered in terms of unexpected effects. Governments in these countries should improve the business environment by establishing a framework that further encourages domestic and foreign investment.Originality/valueIn this article, the authors adopt the panel data to study the links between financial flows and economic growth. The authors considered four groups of countries by income.


2018 ◽  
Vol 65 (01) ◽  
pp. 239-256
Author(s):  
SUNG-KO LI ◽  
CHUN-KEI TSANG

Many developing countries are receiving official development assistance (ODA). Whether ODA is beneficial or harmful to the receiving country is controversial in the literature. This paper analyzes this issue from a new angle by adopting the framework of competitiveness which allows us to link resource allocation with economic growth. Under this framework, we point out that the mechanism of resource allocation influences the effectiveness of ODA on economic growth. By applying data envelopment analysis (DEA) to competitiveness, we capture the effects of inefficient and biased allocation of resources on ODA. The data confirm the co-existence of positive and negative impacts of ODA. Finally, we conclude that current ODA is not efficient in helping most of the receiving countries.


2020 ◽  
Vol 27 (33) ◽  
pp. 41776-41786
Author(s):  
Sue Kyoung Lee ◽  
Gayoung Choi ◽  
Eunmi Lee ◽  
Taeyoung Jin

Abstract The purpose of this study is to investigate the relationship between official development assistance (ODA) on CO2 emissions based on both direct and indirect frameworks, using the annual panel data of 30 recipient countries of Korea from 1993 to 2017. It employs a modified impact, population, affluence, and technology (IPAT) model and a simultaneous equation framework for the direct model and indirect model, respectively. The empirical results suggest that ODA has both a direct and an indirect mitigation impact in the recipient countries. Compared to the direct impact, a small indirect mitigation impact of ODA on CO2 emissions is derived. However, the estimation results of the environmental Kuznets curve (EKC) equation imply that economic growth has the potential of mitigating the environmental degradation when the economic development in recipient countries of Korea reaches a certain level. Therefore, the bilateral cooperation, through ODA and the supportive policy, should make an effort to promote economic development and mitigation of environmental degradation in developing countries.


2022 ◽  
Author(s):  
Le Thanh Tung

Poverty reduction is an important one of the long-term global goals. This paper analyses the impact of international capital inflows on poverty with a sample covering 26 developing countries in the Asia-Pacific region. A panel dataset is collected over the period of 1980-2015. The results conclude some new findings, which show international capital inflows have two kinds of effects on the poverty rate. The result shows that remittances and trade openness has positive effects on the poverty rate of the economies. On the other hand, external debt and official development assistance have negative effects on poverty in the region. Our findings lead to some valuable implications, in which, the policymakers need more careful when using the external debt as well as official development assistance to support economic growth because these tools can make the more serious on the poverty in countries. However, the policymakers can use the remittances as an important international capital to solve the lack of internal financial resource. Besides, the result points out that trade openness is a good tool for decreasing the poverty rate by trading with the outside.


2019 ◽  
Vol 11 (8) ◽  
pp. 2418 ◽  
Author(s):  
Nadia Singh ◽  
Richard Nyuur ◽  
Ben Richmond

Renewable energy is being increasingly touted as the “fuel of the future,” which will help to reconcile the prerogatives of high economic growth and an economically friendly development trajectory. This paper seeks to examine relationships between renewable energy production and economic growth and the differential impact on both developed and developing economies. We employed the Fully Modified Ordinary Least Square (FMOLS) regression model to a sample of 20 developed and developing countries for the period 1995–2016. Our key empirical findings reveal that renewable energy production is associated with a positive and statistically significant impact on economic growth in both developed and developing countries for the period 1995–2016. Our results also show that the impact of renewable energy production on economic growth is higher in developing economies, as compared to developed economies. In developed countries, an increase in renewable energy production leads to a 0.07 per cent rise in output, compared to only 0.05 per cent rise in output for developing countries. These findings have important implications for policymakers and reveal that renewable energy production can offer an environmentally sustainable means of economic growth in the future.


2015 ◽  
Vol 1 (2) ◽  
pp. 168
Author(s):  
Sarah Anabarja

Japan has been well-known due to its advanced technology innovation particularly in the field of industrial technology. Some Japanese manufactures that based on technological development have become the main supplier of high-technology goods in many countries in the world most importantly in Asia. Since 1970s, Japan government has implemented its foreign assistance called Official Development Assistance (ODA) to developing countries including Indonesia. Japan has assisted the developing countries through its export-credit program. This paper will discuss the effectiveness of ODA and its implementation. In the first part of this paper, it will elaborate the history and structure of Japan’s ODA. In the next part, it will also explain the successful achievement of this program. Besides, it will also examine whether or not the implementation of this assistance has effectively reached its target and goals. The understanding of essential component of development strategy to increase the ODA’s effectiveness is related with the usage of that assistance in the recipient country. This perception is in line with Kevin Morrison (2000) saying the four elements of foreign assistance’s effectiveness particularly the technical assistance of Japan.


Author(s):  
Kaustubh Jain

The debate about developing countries having to choose between economic growth and biodiversity protection has been going on for a long time. This paper sought to add to existing literature written on that topic by exploring the relationship between economic growth and biodiversity loss. It argued that in the long term, developing countries need to protect biodiversity as a prerequisite for economic growth to occur and that the severe impact of biodiversity loss on vulnerable indigenous communities is a reason enough to make the protection of biodiversity a priority. The researcher first identified the primary reasons for why biodiversity occurs, then advocated for the prevention of biodiversity by exploring two impacts of biodiversity loss: the impact on indigenous communities and the impact on economic growth. The paper then briefly also explained the policies that both governments, as well as nongovernment actors, can implement in order to tackle biodiversity loss and protect our environment.


2000 ◽  
Vol 52 (2) ◽  
pp. 175-205 ◽  
Author(s):  
Eva Bellin

Many classic works of political economy have identified capital and labor as the champions of democratization during the first wave of transition. By contrast, this article argues for the contingent nature of capital and labor's support for democracy, especially in the context of late development. The article offers a theory of democratic contingency, proposing that a few variables, namely, state dependence, aristocratic privilege, and social fear account for much of the variation found in class support for democratization both across and within cases. Conditions associated with late development make capital and labor especially prone to diffidence about democratization. But such diffidence is subject to change, especially under the impact of international economic integration, poverty-reducing social welfare policies, and economic growth that is widely shared. Case material from Korea, Indonesia, Mexico, Zambia, Brazil, Tunisia and other countries is offered as evidence.


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