Aid and Growth: A Study of South East Asia

Posted: 21 Sep 2010 Last revised: 25 Jan 2011

See all articles by Paul J. Burke

Paul J. Burke

Australian National University (ANU) - Crawford School of Public Policy

Fredoun Z. Ahmadi-Esfahani

University of Sydney

Date Written: 2006

Abstract

The success of foreign aid in promoting economic growth in developing nations is an issue of considerable controversy. In this article, the effectiveness of aid in promoting growth in three South East Asian countries – Thailand, Indonesia and the Philippines – is empirically tested, using a simultaneous equation model in which growth and savings are jointly determined. The results indicate that aid had an insignificant effect on the growth rates of the three nations during 1970-2000 and did not displace domestic savings. The findings appear valid for both before and during the Asian financial crisis and underline the importance of exports and foreign direct investment in the South East Asian growth experience.

Keywords: Foreign Aid, Economic Growth, South East Asia, Effectiveness

JEL Classification: O11, F35

Suggested Citation

Burke, Paul J. and Ahmadi-Esfahani, Fredoun, Aid and Growth: A Study of South East Asia (2006). Journal of Asian Economics, Vol. 17, No. 2, 2006, Available at SSRN: https://ssrn.com/abstract=1680059

Paul J. Burke (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, Australian Capital Territory ACT 0200
Australia

Fredoun Ahmadi-Esfahani

University of Sydney ( email )

Department of Agricultural and Resource Economics
Sydney NSW 2006
Australia
+61 2 9351 3559 (Phone)
+61 2 9351 4953 (Fax)

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