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Foreign Aid and Economic Growth: A Cointegration Test for Cambodia

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  • Rajarshi Mitra

Abstract

Recent studies have shown that foreign aid can have either a positive or a negative impact on economic growth. Due to this lack of general consensus the effectiveness of foreign aid for economic growth remains a contentious issue. This paper estimates a structural VECM for the period 1971-2009 and examines the long-run relationship between foreign aid and economic growth of an aid-dependent Asian economy, Cambodia. Johansen cointegration test indicates a significantly positive long-run effect of foreign aid on economic growth of Cambodia for the period of study.

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  • Rajarshi Mitra, 2013. "Foreign Aid and Economic Growth: A Cointegration Test for Cambodia," Journal of Economics and Behavioral Studies, AMH International, vol. 5(2), pages 117-121.
    • Handle: RePEc:rnd:arjebs:v:5:y:2013:i:2:p:117-121
    DOI: 10.22610/jebs.v5i2.386
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    1. Pahlaj Moolio & Somphyvatanak Kong, 2016. "Foreign Aid and Economic Growth: Panel Cointegration Analysis for Cambodia, Lao PDR, Myanmar, and Vietnam," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 2(4), pages 417-428, October.
    2. Santos Bila & Mduduzi Biyase & Matias Farahane & Thomas Udimal, 2023. "Foreign Aid And Economic Growth In Sub-Saharan African Countries," Economics Working Papers edwrg-03-2023, College of Business and Economics, University of Johannesburg, South Africa, revised 2023.
    3. Heng Hokmeng & Pahlaj Moolio, 2015. "The Impact of Foreign Aid on Economic Growth in Cambodia: A Co-integration Approach," KASBIT Business Journals (KBJ), Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 8(1), pages 4-25, May.
    4. Yahyaoui, Ismahene & Hamdaoui, Mekki & Bouchoucha, Najeh, 2019. "Official development aid effectiveness and economic growth in African countries: The role of the governance," MPRA Paper 95410, University Library of Munich, Germany.
    5. Moheddine Younsi & Marwa Bechtini & Hasna Khemili, 2021. "The effects of foreign aid, foreign direct investment and domestic investment on economic growth in African countries: Nonlinearities and complementarities," African Development Review, African Development Bank, vol. 33(1), pages 55-66, March.
    6. Ismahene Yahyaoui & Najeh Bouchoucha, 2020. "Foreign Aid-Growth Nexus in Africa: Do Institutions Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(4), pages 1663-1689, December.
    7. Onneetse L Sikalao-Lekobane, 2014. "Do Macroeconomic Variables Influence Domestic Stock Market Price Behaviour in Emerging Markets? A Johansen Cointegration Approach to the Botswana Stock Market," Journal of Economics and Behavioral Studies, AMH International, vol. 6(5), pages 363-372.

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