An empirical investigation of relationships between official development assistance (ODA) and human and educational development

Abstract

PurposeThis paper aims to investigate the relationship between official development assistance (ODA) and human and educational development in countries in Southeast Asia.Design/methodology/approachIn the study described here, empirical evidence was used to investigate the relationship between ODA provided between 1990 and 2004 and its impact on the human and educational development of countries in Southeast Asia.FindingsA review of efforts made over the past 15 years in providing developmental aid reveals that there still remain gaps in the human development dimensions – income, education, and health – within and between countries. Second, real gross domestic product and foreign direct investment have significant associations with human and educational development, while, at the aggregate level, ODA has a significant positive association only with human development. Third, ODA that is targeted to support socio‐economic development has a significant relationship with human development. Fourth, ODA allocated to unspecified levels of education, or post‐secondary education, shows a significant association with human development, while ODA provided for basic education, secondary education and post‐secondary education has a significant relationship with educational development.Research limitations/implicationsThe study focuses on countries that have a medium level of human development, namely Cambodia, Indonesia, Malaysia, Myanmar, Thailand, Philippines, Laos and Vietnam.Practical implicationsThe findings and results are useful guidelines for major stakeholders, including donors and the governments of recipient countries, for designing aid systems and effectiveness.Originality/valueThis paper draws the attention of donors and the governments of recipients to the effectiveness of aid and its targets.