The impacts of biased resource allocation on the effectiveness of official development assistance

Sung Ko Li*, Chun Kei Tsang

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    1 Citation (Scopus)
    37 Downloads (Pure)

    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.

    Original languageEnglish
    Pages (from-to)239-256
    Number of pages18
    JournalSingapore Economic Review
    Volume65
    Issue number1
    DOIs
    Publication statusPublished - 1 Mar 2020

    Scopus Subject Areas

    • Economics and Econometrics

    User-Defined Keywords

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

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