Foreign Aid and Economic Growth in the Philippines

Rajarshi Mitra () and Md. Sharif Hossain ()
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Rajarshi Mitra: Kyushu University
Md. Sharif Hossain: University of Dhaka

Economics Bulletin, 2013, vol. 33, issue 3, 1706-1714

Abstract: With recent studies generating skepticism toward aid-effectiveness for economic growth of some aid-dependent economies, the need to re-examine the effectiveness of foreign aid for economic growth has gained increasing importance. This paper examines the role of foreign aid in per-capita economic growth in the Philippines, a country that has historically been one of the largest recipients of foreign aid. A VECM is estimated for the period 1970-2010. Results indicate a significantly negative relationship between foreign aid and per-capita economic growth. A 1% rise in the share of aid in GDP results in a fall in per-capita real income by 0.51%.

Keywords: VECM; Cointegration Test; Short-Run and Long-Run Elasticities. (search for similar items in EconPapers)
JEL-codes: F0 F4 (search for similar items in EconPapers)
Date: 2013-07-11
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Citations: View citations in EconPapers (6)

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