The impact of foreign aid on economic growth in the Indochina countries

Yin, Pui Mun (2012) The impact of foreign aid on economic growth in the Indochina countries. [Final Year Project Report] (Unpublished)

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Abstract

Although foreign assistance has been funded to the developing countries for several decades, many of the recipient countries such as the Indochina countries are still remain underdeveloped and experiencing low growth. This study is conducted to investigate the relationship between foreign aid and economic growth in the Indochina countries namely Cambodia, Lao PDR, Myanmar, Thailand and Vietnam for the period 1993 to 2009. The study incorporates a set of variables including economic growth, official development assistance, and other support variables such as foreign investment and trade openness. The ARDL approach is applied to examine the cointegration relationship among the variables and short-run causality test is performed to analyze the causality effect among the variables. The study found a negative long-run relationship between foreign aid and economic growth in Cambodia, Thailand and Vietnam, while foreign aid of Lao PDR and Myanmar is not significant in generating growth in the long-run. However, the impact of foreign aid on economic growth in the short-run is less significant for all Indochina countries. At the end, it is suggested that these countries should rely upon the internal resources to promote economic growth rather depending on external factors.

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