Revisiting the growth-governance relationship in developing Asian and Oceanic economies

Abstract

In recent decades, aid agencies, international financial institutions, and developed countries have placed an increased focus on institutional quality (governance) as a criterion for the allocation of financial assistance to the developing countries. Such foreign aid conditionality is based on the general consensus that better governance leads to better economic outcomes. For Asian and Oceanic economies, however, previous studies have reported a negative relationship between economic growth and governance terming it the 'growth-governance paradox'. We revisit the role of governance and economic growth using panel data for 37 Asian and Oceanic countries over the period of 1996-2013. Unlike previous studies, we employ panel analytic methodologies that account for different sources of biases and find that governance has, in fact, a positive relationship with growth in developing Asian and Oceanic economies.

Revisiting economic effectiveness of foreign aid: The case of Japanese aid to China

“…The characteristics of the recipient country, such as policy, economy, resources and culture, as well as the social and trade relations between the donor country and the recipient country, may exert an influence on the effects of aid, thus resulting in a complicated relationship between aid and economic growth. For instance, aid has a more positive impact on the country, which has a good political governance capability (Burnside & Dollar, 2000;Dietrich, 2016;Fayissa & Gill, 2016), excellent economic policy (Bhattarai, 2009;Minoiu & Reddy, 2010;Sharma & Bhattarai, 2013) and a high degree of openness (Guillaumont & Chauvet, 2001). China used to be one of the largest aid recipient countries in the world.…”

Economic Growth, Total Factor Productivity, and Institution Quality in Low-Middle Income Countries in Asia

“…Therefore, the authors suggest that reducing corruption and controlling inflation should be one of the first priorities in implementing macro and public policies. Fayissa and Gill (2015) empirically investigated the impact of public administration on economic growth by using panel data for 37 Asian and Coastal countries during the 1996-2013 period. There are two empirical models with the dependent variables are GDP per capita and GDP growth, explanatory variables including institutions (derived by one of six indexes from WGI data), FDI, trade openness, total investment and aid.…”

ODA and Provincial Economic Growth in Vietnam

“…Besides, according to research Fayissa & Gill (2015) studied empirically the impact of governance institutions, ODA on the economic growth by using data from 37 countries in Asia and coastal areas for the 1996-2013 period. The research results indicate that countries that have better ODA governance are more likely to use ODA and more positive impact on economic growth.…”

“…In addition, ODA also contributes to creating jobs, improve the quality of human resources (Killick, 1991;Crosswell, 1998;Tarp, 2006;Fayissa & Gill, 2015). Because the ODA characteristic is attached to the programs and projects of the receiving country so it creates a large volume of employment.…”