Should We Provide More Economic Aid to Recipient Countries in Crisis?: Focusing on the Effectiveness of Financial Aid

Abstract

This study analyzed the impact of bilateral aid among official development aid on recipient countries. The significance is that the effect of aid was investigated in a complex manner by dividing the perspective of economic growth measured by Gross National Income (GNI) per capita and quality of life measured by the Human Development Index(HDI). In addition, limited empirical analysis by continent or country in previous studies was expanded to cover all recipient countries. Official Development Assistance (ODA) data from 2005 to 2019 were collected. A data sample of bilateral aid from 60 countries was constructed from the official development aid data from 88 recipient countries. According to the Fixed-Effect (FE) and Random-Effect (RE) model estimation coefficient, the donor’s continued support was a statistically significant variable. This study concluded that the donor country’s continuous aid is important, but the recipient country’s political and administrative capabilities are also important factors in improving people’s economic quality of life.