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Rajarshi Mitra and Md. Sharif Hossain
''Foreign Aid and Economic Growth in the Philippines''
( 2013, Vol. 33 No.3 )
With recent studies generating skepticism toward aid-effectiveness for economic growth of some aid-dependent economies, the need to re-examine the effectiveness of foreign aid for economic growth has gained increasing importance. This paper examines the role of foreign aid in per-capita economic growth in the Philippines, a country that has historically been one of the largest recipients of foreign aid. A VECM is estimated for the period 1970-2010. Results indicate a significantly negative relationship between foreign aid and per-capita economic growth. A 1% rise in the share of aid in GDP results in a fall in per-capita real income by 0.51%.
Keywords: VECM, Cointegration Test, Short-Run and Long-Run Elasticities.
F4 - Macroeconomic Aspects of International Trade and Finance: General
Manuscript Received : Jan 23 2013 Manuscript Accepted : Jul 11 2013

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