Document Type

Journal Article

Department/Unit

Department of Economics

Title

The Impacts of Biased Resource Allocation on the Effectiveness of Official Development Assistance

Language

English

Abstract

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.

Keywords

Official development assistance, data envelopment analysis, endowment effect, misallocation effect, biased effect

Publication Date

2018

Source Publication Title

The Singapore Economic Review

Publisher

World Scientific Publishing

DOI

10.1142/S0217590818500285

ISSN (print)

02175908

ISSN (electronic)

17936837

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