Foreign Aid’s Impact on Economic Growth during Korean Development Era: A Disaggregated Analysis

다국어 초록 (Multilingual Abstract)

This study aims to revisit aid effectiveness but using disaggregated and lagged aid concepts. It empirically tests which of the disaggregated aid categories most effectively enhanced investment and economic growth during Korea’s remarkable development era (1960–2001); it also tests whether disaggregated aid promoted investment and economic growth more under a government with sound governance. The test results show that production and infrastructure sectors aid enhanced investment and economic growth in Korea. However, the results failed to show evidence that socialadministrative sector aid promoted economic growth, although it may have contributed to poverty reduction. The results also show that production and infrastructure sector aid was effective irrespective of governance systems. The findings have farreaching implications for aid allocation and coordination policies as well as economic growth and poverty reduction strategies during the SDG era.

참고문헌 (Reference)

1 World Bank, "World Bank Group and Republic of Korea: 60 Years of Partnership"

2 Easterly, W., "The Quest for Growth. How we wandered the tropics trying to figure out how to make poor countries rich"

3 Juselius, K., "The Long–Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis" 76 (76): 153-184, 2014

4 Dollar, D., "The Increasing Selectivity of Foreign Aid, 1984–2003" 34 (34): 2034-2046, 2006

5 Pickbourn, L., "The Impact of the Sectoral Allocation of Foreign Aid on Gender Inequality" 28 : 396-411, 2016

6 Martins, P.M.G., "The Impact of Foreign Aid on Government Spending, Revenue and Domestic Borrowing in Ethiopia" International Poverty Center 2007

7 Feeny, S., "The Impact of Foreign Aid on Economic Growth in Papua New Guinea" 41 : 1092-1117, 2005

8 Mohammed Seid Hussen, "The Impact of Foreign Aid on Economic Growth in Ethiopia" 국제지역연구소 13 (13): 87-112, 2012

9 Hansen, H., "The Impact of Aid and External Debt on Growth and Investment" University of Nottingham 2002

10 Ovaska, T., "The Failure of Development Aid" 23 (23): 175-188, 2003

11 Sachs, J., "The End of Poverty: Economic Possibilities for Our Time" 12 : 17-21, 2008

12 Lee, J.W., "The Effects of Grant and Loan Aids on Economic Growth During the Korean Economic Development Era" 9 : 4-21, 2006

13 Donaubauer, J., "The Effectiveness of Aid Under Post-Conflict Conditions: A Sector-Specific Analysis" 55 (55): 720-736, 2019

14 Doucouliagos, H., "The Aid Effectiveness Literature: The Sad Results of 40 Years of Research" 23 : 433-461, 2009

15 Baumöhl, E., "Stationarity of Time Series and the Problem of Spurious Regression" MPRA 2009

16 Granger, C.W.J., "Spurious Regressions in Econometrics" 2 : 111-120, 1974

17 구민경, "Public Financial Management Systems and Aid Effectiveness" 국제개발협력학회 10 (10): 5-38, 2018

18 Boone, P., "Politics and the Effectiveness of Foreign Aid" 40 : 289-329, 1996

19 Hansen, H., "Policy Arena: Aid Effectiveness Disputed" 12 : 375-398, 2000

20 OECD, "Paris Declaration for Aid Effectiveness" OECD 2005

21 Dalgaard, C.J., "On Aid, Growth and Good Policies" 37 : 17-41, 2001

22 Lucas, Jr., R., "Making a Miracle" 61 (61): 251-272, 1993

23 Birchler, K., "Making Aid Work for Education in Developing Countries: An Analysis of Aid Effectiveness for Primary Education Coverage and Quality" 48 : 37-52, 2016

24 Sundberg, M., "Making Aid Work" 43 (43): 14-17, 2006

25 Kim, J.K., "Impact of Foreign Aid on Korea’s Development" Ministry of Strategy and Finance, and KDI School 2012

26 Mohey-ud-din, G., "Impact of Foreign Aid on Economic Development in Pakistan: 1960–2002" MPRA 2005

27 Dollar, D., "Growth is Good for the Poor" 7 : 195-225, 2002

28 Isham, J., "Governance and Returns on Investment: An Empirical Investigation" World Bank 1995

29 Eichengreen, B., "From Miracle to Maturity: the Growth of the Korean Economy" Harvard University Press 2012

30 Lee, J.S., "Foreign Capital in Economic Development: Korean experiences and policies. Modularization of Korea’s Development Experience" KDI School 2013

31 Bräutigam, D.A., "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa" 52 : 255-285, 2004

32 Abual-Foul, B., "Foreign Aid and Economic Growth in Egypt and Jordan: An Empirical Analysis. Institutions and Economic Development" Economic Research Forum 2007

33 Lee, G.G., "Foreign Aid and Cooperation for Korea" Korea Organization of International Assistance 2004

34 Akramov, K., "Foreign Aid Allocation, Governance, and Economic Growth" University of Pennsylvania Press 2012

35 Lee, A.R., "Fiscal Behavior of Aid Recipient Countries During the Millennium Era" 1 (1): 37-62, 2014

36 Claessens S, "Empirical Evidence on the New International Aid Architecture" IMF 2007

37 Enia D. Rugare, "Effectiveness of Program and Project Aid in Sub-Sahara African Countries" 국제개발협력학회 8 (8): 37-66, 2016

38 Kosack, S., "Effective aid: How Democracy Allows Development Aid to Improve the Quality of Life" 31 : 1-22, 2003

39 Mishra, P., "Does Health Aid Matter?" 28 (28): 855-872, 2009

40 Riddell, R.C., "Does Foreign Aid Really Work?" Oxford University Press 2007

41 Busse, M., "Does Foreign Aid Improve Governance?" 104 : 76-78, 2009

42 Dreher, A., "Does Aid for Education Educate Children? Evidence from Panel Data" 22 (22): 291-314, 2008

43 Lee, K.W., "Do Emerging Donors Allocate Aid As DAC Members Do? The Case of Korea in the Millennium Era" 24 : 977-988, 2012

44 OECD, "Development Cooperation Report" OECD 2015

45 Mavrotas, G., "Development Aid: a Fresh Look" Palgrave Macmillan 2009

46 World Bank, "Country Data Website"

47 Clemens, M., "Counting Chickens When They Hatch: the Short-Term Effect of Aid on Growth" Center for Global Development 2004

48 Clemens, M.A., "Counting Chickens When They Hatch: Timing and the Effects of Aid on Growth" 122 (122): 590-617, 2012

49 Lee, K.W., "Borrowing from the World Bank for Education: Lessons from Korea and Mexico" 13 (13): 49-71, 2010

50 Berthelemy, J.-C., "Bilateral Donors’ Interest vs. Recipients’ Development Motives in Aid Allocation: Do All Donors Behave The Same?" 10 (10): 179-194, 2006

51 Berthelemy, J.-C., "Bilateral Donors’ Aid Allocation Decisions: A Three-Dimensional Panel Analysis" 13 (13): 253-274, 2004

52 Arndt, C., "Assessing Foreign Aid’s Long-Run Contribution to Growth and Development" 69 : 6-18, 2015

53 Keynes, J.M., "Alternative Theories of the Rate of Interest" 47 : 241-252, 1937

54 Mosley, P., "Aid, the Public Sector and the Market in Less Developed Countries" 97 : 616-641, 1987

55 Dowling Jr, J.M., "Aid, Savings, and Growth in the Asian Region" 21 (21): 3-13, 1983

56 Burnside, C., "Aid, Policies, and Growth" 90 (90): 847-868, 2000

57 Arndt, C., "Aid, Growth, and Development: Have We Come Full Circle?" 1 (1): 1-27, 2010

58 Svensson, J., "Aid, Growth and Democracy" 11 : 275-297, 1999

59 Papanek, G.F., "Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries" 81 (81): 120-130, 1973

60 Lloyd, T., "Aid, Exports and Growth in Ghana" CREDIT 2001

61 Addison, T., "Aid, Debt Relief and New Sources of the Finance for Meeting the Millennium Development Goals" United Nations University. World Institute for Development Economics Research 2005

62 Mekasha, T.J., "Aid and Growth: What Meta-Analysis Reveals" 49 : 564-583, 2013

63 Rajan, R.G., "Aid and Growth: What Does the Cross-Country Evidence Really Show?" 90 (90): 643-665, 2008

64 Gomanee, K., "Aid and Growth in Sub-Saharan Africa: Accounting Transmission Mechanisms" 17 : 1055-1075, 2005

65 Mavrotas, G., "Aid and Growth in India: Some Evidence from Disaggregated Aid Data" 3 (3): 19-48, 2002

66 Hansen, H., "Aid and Growth Regressions" 64 (64): 547-570, 2001

67 Lensink, R., "Aid Instability as a Measure of Uncertainty and the Positive Impact of Aid on Growth" 36 : 31-49, 2000

68 Collier, P., "Aid Allocation and Poverty Reduction" 46 (46): 1475-1500, 2002

69 Bacha, E.L., "A Three-gap Model of Foreign Transfers and the GDP Growth Rate in Developing Countries" 32 : 279-296, 1990

70 World Bank, "A Productive Partnership: The World Bank and the Republic of Korea 1962–1994"