Hiroaki Sakurai

Correspondence: Hiroaki Sakurai, hiroaki.sakurai@gakushuin.ac.jp

Faculty of Intercultural Studies, Gakushuin Women’s College

pdf (733.39 Kb) | doi: https://doi.org/10.47260/bae/1019

Abstract

This study examines the relationship between foreign aid and investment in Thailand in two ways to see whether foreign aid contributes to Thai economy through encouraging investment in Thailand. The estimation results are summarized as follows. First, the relationship between foreign aid and investment adding to trade, savings, and growth from 1975 to 2020 is shown as positive relationships by using OLS but not by using VAR model. Second, positive relationship between the accumulated foreign aid and foreign direct investment from 1970 to 2020 is shown by using the VAR model, the Granger causality test, and the Impulse response test. Based on the estimation results, we infer that in Thailand foreign aid mainly arranged for social infrastructure since the 1980s guided investments to an extent since foreign aid and investment in Thailand has positive relationship under some restrictions.

Keywords:

  Foreign Aid, Vanguard, Foreign Direct Investment, Thailand.

References

Arndt, C., Jones, S., and Tarp, F. (2016). What is the aggregate economic rate of return to foreign aid? The World Bank Economic Review, 30(3), 446-474.Besley, T., and Burgess, R. (2003). Halving global poverty. Journal of Economic Perspectives, 17(3), 3-22.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.Dollar, D., and Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7, 195-225.Easterly, W., Levine, R., and Roodman, D. (2004) Aid, policies, and growth: comment. American Economic Review, 94(3), 774-780.Hansen, H. and Tarp, F. (2000). Aid effectiveness disputed. Journal of International Development, 12(3), 375-398.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.Kimura, H, and Todo, Y., (2010). Foreign aid a vanguard of foreign direct investment? A gravity-equation approach, World Development, 38(4), 482-497.Nowak-Lehmann, F., Dreher, A., Herzer, D., Klasen, S. and Martinez-Zarzoso, I. (2012). Does foreign aid really raise per capita income? A time series perspective. Canadian Journal of Economics, 45(1), 288-313.Nowak-Lehmann, F., and Gross, E. (2021). Aid effectiveness: when aid spurs investment, Applied Economic Analysis, 29(87), 189-207.Ravallian, M. (2001). Growth, inequality and poverty: looking beyond averages. World Development, 29(11), 1803-1815.Rajan, R.G. and Subramanian, A. (2008). Aid and growth: what does the cross-country evidence really show? Review of Economics and Statistics XC. 90(4), 643-665.Sakurai, H. (2021). Effects of foreign aid: Evidence from Thailand. Springer, New Frontiers in Regional Science: Asian Perspectives.