How does Japanese ODA really contribute to economic growth for ASEAN countries?

Hien Phuc Nguyen1, Anh Ngoc Quang Huynh2, Ulrike Reisach3, Xuyen Le Thi Kim1
1 Foreign Trade University, Hanoi, Vietnam
2 University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam
3 Neu-Ulm University of Applied Sciences, Germany

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Abstract

Japan has provided ODA funding for promoting economic development in ASEAN countries for a long time. This study aims to verify how Japan’s ODA contributes to economic growth of the ASEAN countries during the period of 2008-2020. Based on the Cobb-Douglas production function, we build a model to estimate the effects of the ODA funding on economic growth. The results show that the ODA exhibits a significantly positive relationship with economic growth of these countries. A one percent increase in the ODA inflow contributes to the economic growth by 0.226 percent. Capital and labor are important factors driving the economic growth while FDI has a negligible impact.

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