Foreign aid and economic growth: evidence from Cambodia

Seng Sothan

The Journal of International Trade & Economic Development, 2018, vol. 27, issue 2, 168-183

Abstract: This paper attempts to examine the growth impact of foreign aid in Cambodia over the period 1980–2014, using the autoregressive distributive lag (ARDL) bounds testing approach. The study also incorporates investment and trade openness into the model. The empirical findings show that trade openness has positive effects on growth in both the short run and the long run; investment has positively contributed to growth in the long run while foreign aid has positive impact on growth only for the short run. On the contrary, in the long run, it has negative impact on investment and growth. This can be suggested that dependence on foreign aid for long periods of time does not positively contribute to investment and growth in Cambodia. In order to achieve sustainable growth and enhanced industrialization, policy-makers should move from aid dependence to promote investments through elevating domestic and foreign capital in the country.

Date: 2018
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Citations: View citations in EconPapers (13)

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DOI: 10.1080/09638199.2017.1349167

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