UNIVERSITY OF ECONOMICS & BUSINESS FACULTY OF POLITICAL ECONOMICS GRADUATION THESIS Supervisor : MSc Do Hoang Phuong Student’s name : Dinh Thi Minh Anh Class : QH2019-E Economics CLC 6 Program : High quality Hanoi, 05/2023 UNIVERSITY OF ECONOMICS & BUSINESS FACULTY OF POLITICAL ECONOMICS GRADUATION THESIS Supervisor : MSc Do Hoang Phuong Reviewer Student’s name : Dinh Thi Minh Anh Class : QH2019-E Economics 6 Program : High quality Hanoi, 05/2023 ACKNOWLEDGMENT First of all, with the sincerest gratitude, I would like to thank my supervisor: M. Sc Do Hoang Phuong - lecturer at the Faculty of Political Economics at University of Economics & Business, VNU for your very dedicated instructions and helpful advice during my thesis writing process. Next, I would like to thank all the lecturers of the Faculty of Political Economics in particular and the lecturers of the University of Economics & Business in general for teaching me during four years. The knowledge and skills that I have learned during the past time are the foundation for me to complete this thesis.
In addition, this thesis also used some materials from previous studies. Therefore, I would also like to thank the authors of these studies. Finally, I would like to send to all lecturers working at University of Economics & Business, VNU best wishes for health, happiness in life and success in work. I hope that the Faculty of Political Economics and the University of Economics & Business will grow stronger and enhance prestige and position in both the fields of education and research at home and abroad.
Student Dinh Thi Minh Anh TABLE OF CONTENT LIST OF ABBREYVIA TIONS. HH TH TH 000000088096 86 i LIST OF CHARTS .ccssccssesssssscssssersssccsssessesssessseossssssenssensesscssassscssssassenssesssensesessses ii LIST OF FIGURES .0 000900009009080956808 iii LEST OB TABLES sccsscsssessssesssocsssessosssenssanssesssesssnssscessnssssocssenssassssnssusssnsssonsssessses iv MIN TROT TIOOIN ssc scccscccscsssssacesccssessscassaessesssscssessesscssscssassascssussssesanssenasssosssosssess 1 Dy BACEKGTODHIENHD(ávvi6660664461110046644111100240411111114/14113919034444143411944014613190441441391100411419419004444% 1 2. Literature review and Research Ốap.08804 98 2 Bodes TRĐS 01T L CÍÍ ẤN HÍσa. Objective of the SẤUICỈ,.
0000000060004 06080 6 Dell, GrOMEr TA (0 CC TY saasstsss456154156655446115%5594333043549729213133402013034354533937341549791024353953135 6 3. Specific ODjj©CÍÏVS. Object and range Of Study. Object of the SÍUY.
Range Of the Study. 0000400000000 66088800996 7 Dados À BI? ssscsssssussesvssscesesesssssssesssesessssscsusessssessssssracasasssessussssssssusssssasasuasssusssiaseseses 7 5. Stucture Of the Study. 0 0000000060004 996 8 CHAPTER 1: ANALYTICAL ERAMEWORK.
9 1,1,1, ODA cu iiiie4160044462662020041616134900344426102616100440024444400143610100169840096 9 1. Definition of QÌDA. Characteristics of ODA. Classification Of ODA.
Impacts Of ODA. Definition Of HDI. Pama OF LÀN | ¿. Calculation Im€fÏIO(C.2, PRACHCAL DGÌSsxxsyzssxysxxx655595211956111201351933904551191%9933115339999493193315953917259Ề71153539513355 15 1.
Attracting ODA capital in Southeast Asia SAa{US. Overview about ODA capital received in Southeast A sỉa. Principal ODA donors to Southeast Asia. HDI of Southeast Asian Countries Status.
HDI Index in Southeast Asia Dy V€AFS. HDI Index in Southeast Asia by COUNTIES. HDI Dimensions Index in Southeast ASia .---s «5555 ss<<sss 23 CHAPTER 2: RESEARCH METHODOLOGY AND DATTA. Impact of ODA On HDI.
Impact of FDI on HD ÌÍ,. Impact of GDP on HD Ì. Impact of Remittances on EDÌ. Impact of Political stability on HD l.
Impact of Government Effectiveness on HDI. Impact of Population on HD ÌÍ. Impact of Inflation on HDI. Impact of Government spending on HD Ì.568095880996 60 37 ZsMhe WVU soy5640451041543051330444323951134503134339%9912495394533933139195101033439103495933449141903014579405949955 37 CHAPTER 3: RESEARCH RESULT AND DISCUSSION.
0 000000008006 08 43 Quốc RESUIES sosos6150665605650469104106369613689041560016010493646094349100490708010169139190443906170019402449016 44 3. Impact of Independent variable ODA on HDI. Impact of control variable on HDI. Impact of FDI on HDI in Southeast Asia.
Impact of GDP on HDI in Southeast ASia. Impact of remittances on HDI in Southeast Á sỉa. Impact of Political stability on HDI in Southeast Asia. Impact of Government effectiveness on HDI in Southeast Asia.
Impact of Population on HDI in Southeast A sỉa. Impact of Inflation on HDI in Southeast Á SỈa. Impact of Government spending on HDI in Southeast Asia. 57 CHAPTER 4: POLICY RECOMMENDA TIONS.-c--csccSĂ S25 °sse 60 CO NET SN cc0cc((0(06.
00000809406 67 JXẾLH ÀU TY ssgg5959445565g99164696648951439339999349004344916433997344449309565066389993334030346291059593403 75 Appendix 3.2: VIF for Pooled (QLL. White Test for Pooled QQL.4: Wooldridge Test for Pooled QLÝ. - cọ và 77 Appendix 3.- + SH net 78 Appendix 3.8: Wooldridge Test for Pooled (QLLŠ.9: Wald Test for Pooled OLS .escccccsscccessssectessneecessneeeesseeesssneeeesnanees 79 LIST OF ABBREVIATIONS Abbreviation Original ADB Asian Development Bank ASEAN Association of South East Asian Nations CPIA Country’s Policy and Institutional Assessment DAC Development Assistance Committee FTA Free Trade Agreement GCC Gulf Cooperation Council GDP Gross Domestic Product GNI Gross national income HDI Human Development Index IMF International Monetary Fund LMIC Lower Middle-Income Country ODA Official development assistance ODF Official Development Financing OECD Economic Cooperation and Development UNESCAP Economic and Social Commission for Asia and the Pacific UNDP United Nations Development Programme WB World Bank WGI Worldwide Governance Indicators LIST OF CHARTS Chart 1.1: Total ODA 8 Southeast Asian countries received in 2000-2021 (by years) Chart 1.2: Total ODA 8 Southeast Asian countries received in 2000-2021 (by COUMNUIICS) hiiiỎỎ.3: Five principal ODA donors to Southeast Asia in 2008-2018.4 Life expectancy at birth 8 Southeast Asia countries in 2021 .5 Mean years schooling of 8 Southeast Asia countries in 2021.6 Expected years schooling of 8 Southeast Asia countries in 2021.7: GNI per capita of 8 Southeast Asia countries in 2021.1: Flows of FDI to 8 Southeast Asian Countries (in million US DOLLARS) ¬.2 :Real GDP of Southeast Asia in 2000-2026 .3: Remittances received by 8 Southeast Asian countries in 2000-2021 .4: South-East Asia Population in 1950-2019. 2< 55+ +<+xc+sssss 56 Chart 3.5: Government expenditure in 8 Southeast Asian countries in 2000-2021 0100000080 898.
58 il LIST OF FIGURES Figure 1.1: Scatter Diagram of HDI and real ODA ili LIST OF TABLES Table 1.1 HDI Index in Southeast Asia from 2000 to 2021 .2: HDI of 8 Southeast Asian 1n 2021 .1 Variable Abbreviation, Description, Expected sign and Data source. SH nghe 40 Table 3.2: Correlation analysis T€SUÏ{S. 5 S111 1 9v ng ng kg 42 Table 3.3 Estimated results of factors affecting HDI according to Pooled OLS, FEM 050845) .4 Estimation results of factors affecting HDI by Driscoll-Kray method. Background Economic growth is a very important goal that every country wants to pursue.
However, economic growth is only a part of development because the ultimate goal of development is human. Therefore, the Human Development Index, also known as HDI for short, was created to assess the level of human development achieved by a country or a region. In addition to efforts in economic development as one of the regions with the fastest economic growth in the world with an average of 5% per year (ASEAN, 2019), Southeast Asia also pays great attention to human development and HDI improvement. However, these countries faced several challenges due to a lack of resources to achieve development goals and maintain growth, with the requirement for big resources being a major concern.
Therefore, with the role of supporting poor and developing countries to achieve their goals of economic growth and social welfare improvement, ODA can be seen as an effective solution to help Southeast Asian countries remove this difficulty. Receiving ODA is considered an important way for developing countries to attract resources from foreign governments and international organizations to realize human development goals. According to OECD data, from 2013 to 2018 (a period when there was a boom in ODA to Southeast Asia), this region received a total of $75 billion in ODA from foreign countries and international institutions. This figure was recorded as equivalent to 10% of the total amount of ODA worldwide.
With this amount of ODA, Southeast Asian countries had greater resources to invest in many sectors that promote human development, such as health, education, infrastructure, energy, and 1 the environment. Thereby improving the Southeast Asian nations’ living circumstances and poverty levels. This provided the foundation for these countries to achieve considerable progress in human development and raise the HDI of the area. Specifically, according to ADB statistics, Health and Education are the two dimensions of HDI that improved the most thanks to the ODA received by Southeast Asian countries.
Nevertheless, in addition to the benefits described above, ODA can have negative consequences such as encouraging corruption, raising foreign debt, and growing reliance on ODA-giving nations (Moyo, 2010). From the above roles and impacts, this study was conducted to assess “The impact of ODA on HDI in Southeast Asia”. On that basis, propose solutions to improve HDI based on the benefits received from ODA. Literature review and Research Gap 2.
Literature review Regarding the impact of Official Development Assistance (ODA) on the Human Development Index (HDD), there are some outstanding studies as follows: Nasim et al. (2010) used Vector Error Correction Models (VECM) to examine the causal relationship between ODA and HDI in Pakistan. Specifically, the author wanted to analyze how ODA affects the HDI and the dimensions of the HDI are Health dimensions measured through the Life Expectancy Index (LEI), Knowledge dimensions measured through the Education Index (EI), and Income dimensions measured through GDP Index (GI). The results showed that there is a one-way Granger causality from ODA to HDI, EI, and LEI.
At the same time, a causal relationship between ODA and GI was not found. Research by Rahman et al (2014) compared the impact of ODA on HDI between Bangladesh and India in the period 2000-2012. Specifically, the study 2 wanted to examine whether ODA would have a positive impact on eradicating extreme poverty and improving the quality of life and human development in these two countries. In this study, the impact of ODA on HDI was compared with the effects of other variables such as CO2 emission, mobile subscriptions, inflation, child mortality, and consumer spending.
The data after regression analysis gave the following results: In India, apart from ODA and mobile subscription having a positive impact on HDI, all the remaining variables such as Child mortality rate, Inflation, CO2 emission, and Consumer Spending all have a negative impact on the HDI. In Bangladesh, a positive impact on HDI was found in CO2 emissions and consumer spending. In contrast, ODA, Child Mortality, Inflation, and mobile subscriptions were shown to have a negative impact on Bangladesh's HDI. In summary, in this study, while ODA has a positive effect on HDI in India, it has a negative effect on HDI in the case of Bangladesh.
Afoakwa (2016) used data from 46 sub-Saharan countries from 2003 to 2014 to study the impact of ODA on HDI. The assessment of the impact of ODA and other macroeconomic indicators (FDI, GDP growth, GDP per capita, Gross capital formation, Population growth, Fertility rate, Gross enrolment ratio, Inflation, Trade openness, and Institution expressed through CPIA) on HDI is evaluated through FEM and REM models. According to the research results, ODA has a positive impact on HDI in the short term. However, in the long term, it has negative effects on HDI in sub-Saharan countries.
Berhane (2017) conducted a study in 45 African countries between 2000-2014 to assess whether ODA would have a positive impact on HDI. Besides the independent variable ODA, the authors also set other control variables including GDP growth, Population growth, Inflation, Institutions, Public Expenditure on Education and Health, Public Expenditure on the Military, CO2 emissions, Personal Remittances, Foreign direct investment (FDI) on HDI. The study uses 3 Models to 3 analyze the above impacts most comprehensively. Model 1 as a reduced OLS regression to assess the impact of ODA alone on HDI.
Model 2 is also a reduced OLS regression, but to assess the impact of control variables, ODA is not included. Like Model 3 but this time the subject is both the ODA explanatory variable and the control variables. The research results are summarized as follows: Firstly, for the ODA explanatory variable, the study has not found a significant impact on HDI. Secondly, for the dependent variables, significant positive effects are found in Institutions, GDP growth, and Personal Remittances variables while significant negative effects are found in Population growth, Inflation, and CO2 emissions.