Abstract
This chapter examines the productivity of governmental aid loans, the main portion of foreign aid in Thailand, using the economic growth model both in whole-country time-series data from 1971 to 2013 and in regional panel data from 1986 to 2013. The effect of foreign aid remains a point of discussion, and we hope to clarify this issue. Thailand is considered a good example of a country using governmental aid loans to develop social capital, which then fosters manufacturing industries. Three main outcomes exist. First, we determine the impact of governmental loans on economic growth in Thailand using whole-country data. Second, the marginal production effect of governmental loans has recently been reduced, although not to zero. Third, the impact of foreign aid is lower than that of public capital in Thailand in the same period. Fourth, the quantitative impact of yen loans from the Japanese government can be determined using subregional data. Overall, foreign aid has an impact on economic growth, although the magnitude is smaller than that of public capital. Moreover, the impact is large at the beginning of the development, whereas it is smaller in the process of economic growth.
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Notes
- 1.
Cointegrated VAR model is insignificantly estimated. Although estimation results are shown as the level series, similar estimated results are obtained by using the first difference.
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Sakurai, H. (2021). Foreign Aid Loans and Economic Growth in Thailand. In: Effects of Foreign Aid. New Frontiers in Regional Science: Asian Perspectives, vol 50. Springer, Singapore. https://doi.org/10.1007/978-981-16-2482-7_4
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DOI: https://doi.org/10.1007/978-981-16-2482-7_4
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