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Foreign Aid and Dutch Disease in Thailand

Hiroaki Sakurai

Bulletin of Applied Economics, 2017, vol. 4, issue 2, 57-64

Abstract: This paper examines the economic impact of foreign aid, specifically whether it leads to Dutch disease, in Thailand between 1972 and 2014, using a VAR model, together with the Granger causality test and the impulse response test. Few previous studies have been made of Southeast Asian countries even though Thailand has experienced rapid economic growth using foreign aid to construct infrastructure, and by introducing foreign direct investment into manufacturing industries. The causality and impulse response tests indicate that Dutch disease has not occurred; the impact of foreign aid proved positive, as there was little room to increase consumption and the aid contributed directly to capital accumulation.

Keywords: Foreign Aid; Dutch Disease; Thailand (search for similar items in EconPapers)
JEL-codes: F35 O53 (search for similar items in EconPapers)
Date: 2017
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