Department of Economics
The Impacts of Biased Resource Allocation on the Effectiveness of Official Development Assistance
Many developing countries are receiving official development assistance (ODA). Whether ODA is beneficial or harmful to the receiving country is controversial in the literature. This paper analyzes this issue from a new angle by adopting the framework of competitiveness which allows us to link resource allocation with economic growth. Under this framework, we point out that the mechanism of resource allocation influences the effectiveness of ODA on economic growth. By applying data envelopment analysis (DEA) to competitiveness, we capture the effects of inefficient and biased allocation of resources on ODA. The data confirm the co-existence of positive and negative impacts of ODA. Finally, we conclude that current ODA is not efficient in helping most of the receiving countries.
Official development assistance, data envelopment analysis, endowment effect, misallocation effect, biased effect
Source Publication Title
The Singapore Economic Review
World Scientific Publishing
Li, S., & Tsang, C. (2018). The Impacts of Biased Resource Allocation on the Effectiveness of Official Development Assistance. The Singapore Economic Review. https://doi.org/10.1142/S0217590818500285