ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Foreign Aid and Direct Effect of Poverty Reduction in Thailand

Hiroaki Sakurai

Correspondence: Hiroaki Sakurai,

Gakushuin Women’s College

pdf (996.01 Kb) | doi:


This study examines the effects of foreign aid on poverty reduction in Thailand dividing into ways. One is the direct effect of poverty reduction and the other is the indirect effect of economic growth. Dividing the effect of foreign aid into the direct effect of poverty reduction and the indirect effect through economic growth will contribute to a more efficient way of providing foreign aid by adjusting its purpose and method of foreign aid. The estimation results are summarized as follows: First, the relationship between the infant mortality rate, as a substitute for poverty reduction, and foreign aid from 1961 to 2022 was not significantly estimated using OLS or VAR (Vector Autoregression) models. Second, the relationship between the poverty ratio and foreign aid from 1988 to 2020 for every other year was also insignificant, although economic growth was estimated to be significantly positive. Based on these results, it can be inferred that foreign aid has no direct effect on poverty reduction in Thailand; rather, the indirect effect seems more important.


  Foreign Aid, Poverty, Thailand.


Alvi, A., and Senbeta, A. (2012). Does foreign aid reduce poverty? Journal of International Development, 24(8), 955–976.

Borensztein, E. J., De Gregorio, J., and Lee, J-W. (1998) How does foreign direct investment affect economic growth? Journal of International Economics, 45, 115-135.

Burnside, C., and Dollar, D. (2000). Aid, policies and growth. American Economic Review, 90(4), 847–868.

Collier, P., and Dollar, D. (2002). Aid allocation and poverty reduction, 46, 1475-1500.

Easterly, W., Levine, R., and Roodman, D. (2004) Aid, policies, and growth: comment. American Economic Review, 94(3), 774-780.

Gomanee, K., Girma, S., and Morrissey, O. (2005a). Aid, public spending, and human welfare: evidence from quantile regressions. Journal of International Development, 17(3), 299–309.

Gomanee, K., Morrissey, O., Mosley, P., and Verschoor, A. (2005b). Aid, government expenditure, and aggregate welfare. World Development, 33(3), 355–370.

Hsiao, F. S. T., and Hsiao, MC. W. (2006) FDI, exports, and GDP in East and Southeast Asia – panel data versus time series causality analysis, World Development, 69, 31-43.

Kaya, O., Kaya, I., and Gunter, L. (2013). Foreign aid and the quest for poverty reduction: Is aid to agriculture effective? Journal of Agricultural Economics, 64(3), 583–596.

Kimura, H, and Todo, Y., (2010) Foreign aid a vanguard of foreign direct investment? A gravity-equation approach, World Development, 38(4), 482-497.

Kurita, K. and Kurosaki, T. (2011). Dynamics of Growth, Poverty, and Inequality: A Panel Analysis of Regional Data from Thailand and the Philippines, Asian Economic Journal, 25(1), 3-33.

Mosley, P., and Suleiman, A. (2007). Aid, agriculture and poverty in developing countries. Review of Development Economics, 11(1), 139–158.

Mosley, P., Hudson, J., and Verschoor, A. (2004). Aid, poverty reduction and the ‘new conditionality’. The Economic Journal, 114(496), F217–F243.

Sakurai, H. (2021). Effects of foreign aid: Evidence from Thailand. New frontiers in regional science: Asian perspectives 50, Springer.

Sakurai, H. (2023). Vanguard effect of foreign aid in Thailand. Bulletin of Applied Economics, 10(1), 157-168.

Townsend, R. T. (2011). Financial Systems in Developing Economies. New York: Oxford University Press.