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Does Korea follow Japan in foreign aid? Relationships between aid and foreign investment

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  • Kang, Sung Jin
  • Lee, Hongshik
  • Park, Bokyeong
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    Abstract

    Korea, an emerging donor country, largely considers its economic relations to recipients when allocating its aid. Such practices were preceded by Japan before the 1990s. We expect those similar practices between the two countries will make resemblance in aid outcomes. On a macro-level, we show similarities in aid allocations by type, region, income, and sector. The similarities are ascertained also at a micro-level by our statistical analysis on the relationships between aid and FDI. The analysis based on the FDI gravity model and panel dynamic system GMM estimation shows that only aids from Korea and Japan create more inflow of FDI into their respective recipient developing countries. Those are contrasted with other donors' aids, which are not related to FDI or the substitute for FDI.

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    Bibliographic Info

    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 23 (2011)
    Issue (Month): 1 (January)
    Pages: 19-27

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    Handle: RePEc:eee:japwor:v:23:y:2011:i:1:p:19-27

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    Web page: http://www.elsevier.com/locate/inca/505557

    Related research

    Keywords: Foreign aid Foreign direct investment (FDI) Aid allocation Korea Japan;

    References

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Emerging Partners: Anything but ‘Rogue Aid’
      by Shifting Wealth in ShiftingWealth on 2011-05-03 15:17:00

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