Abstract
In developing countries, infrastructure construction projects are sometimes recognized as mega projects that are important for national development. Such projects are usually implemented as official development assistance (ODA). However, the correlation between the size of ODA and the infrastructure construction project orders gained cannot be completely confirmed. South Korea gives constant aid to developing countries and increases the budget of ODA simultaneously in order to select which country’s construction market to advance. The largest portion of South Korea’s aid continues to be provided to Asian countries. This study analyzes the dynamic relationship between South Korea’s ODA to the Association of Southeast Asian Nations (ASEAN) developing countries and the economic fluctuations represented by infrastructure construction projects, gross domestic product (GDP), gross national income (GNI), and foreign direct investment (FDI). The analysis result shows that the scale of ODA is synergistic to the number of infrastructure construction project orders awarded. In other words, as ODA increases, developing countries can continue to construct infrastructure, and South Korean companies can improve their performance in overseas construction projects in cooperation with those countries. The results of this study can be used as basic data for the decision-making of donor countries when selecting a country’s construction market to advance.
Highlights
For developing countries, mega projects, which require an enormous amount of resources, have difficulty in attracting the required finances [1]
Among Association of Southeast Asian Nations (ASEAN) countries, Laos, Malaysia, and Myanmar were excluded from the analysis since the number of infrastructure construction project orders received by South Korean companies in ASEAN developing countries, which is one of the key variables of this study, did not reject the null hypothesis
In the case of Cambodia, for the change in the amount of South Korea’s official development assistance (ODA), the number of infrastructure construction project orders received by South Korean companies increased in the positive (+) direction from the beginning, and a rate of increase of about 0.48% was maintained in the final period
Summary
Mega projects (including infrastructure construction projects), which require an enormous amount of resources, have difficulty in attracting the required finances (investment costs) [1]. As developing countries generally have low credit ratings, it is difficult for them to acquire large-scale funding in international capital markets. As a result, developing countries receive long-term loans at low interest rates to support funding for securing infrastructure. This makes it difficult for developing countries to promote infrastructure projects through government finances alone [2]. As most developing countries lack public funds, project finances for infrastructure construction projects for roads, harbors, railways, power generation, etc., are very risky. For this reason, infrastructure construction projects of developing countries are usually conducted through ODA. The scale of ODA is related to the success of the infrastructure construction project
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