Does official development assistance (ODA) cause the Dutch disease in developing countries
Bibliographic Data
| ID | 6005854 |
|---|---|
| Authors | Hien Nguyen Phuc (0000-0002-3718-5454, Department of Banking and Finance , , Hanoi), Dung Nguyen Viet (Foreign Trade University , Hanoi), Xuyen Le Thi Kim (Foreign Trade University , Hanoi), Cuong Nguyen Van (0000-0002-1176-6592, Foreign Trade University , Hanoi), Minh Nguyen Van (Foreign Trade University , Hanoi) |
| Year | 2025 |
| Volume | 52 |
| Issue | 7 |
| Pages | 991-1004 |
| Publication date | 2025-06-06 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | International Journal of Social Economics (JOURNAL) |
| Journal identifiers | ISSN: 0306-8293 • E-ISSN: 1758-6712 |
| Publisher | Emerald (PUBLISHER) |
| DOI | 10.1108/ijse-12-2022-0777 |
| OpenAlex | W4402817898 |
| Language | EN |
| References cited | 26 |
Purpose This paper aims to investigate whether official development assistance (ODA) inflows to developing countries (lower-middle and low income) can cause the symptoms of Dutch disease or not. Design/methodology/approach This study applies the methodology of dynamic panel data estimation with a one-step system generalized methods of moment (GMM) for the sample of 59 developing countries from 2001 to 2019. Findings The results indicate that ODA (as a percentage of gross domestic product (GDP)) rises by 1%, the real effective exchange rate (REER) appreciates by 0.252%. This finding reveals that these selected developing countries have faced the symptoms of Dutch disease. The countries with the higher ODA ratio have a higher effect of the Dutch disease, and the managed floating exchange rate regime is the lowest impacted, when compared to the fixed and flexible exchange rate. Practical implications The selected countries are recommended to use ODA inflows right and efficiently. These ODA inflows should be invested in productive sectors or support for production rather than in consumption. The managed float exchange rate regime is applied to reduce the symptom of Dutch disease for the selected countries. The good cooperation of monetary and fiscal policies is important to absorb the huge ODA inflow and sterilize the adverse effects of the disease. Originality/value The paper contributes to the literature and empirical of the Dutch disease. An adverse effect of the huge ODA inflow to the developing countries appreciated of the real exchange rate and caused the symptom of the dutch disease. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2022-0777
Developing country · Development economics · Economic growth · Economics · Political science · HIV/AIDS Impact and Responses · International Development and Aid · Poverty, Education, and Child Welfare
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The Estimation of Economic Relationships using Instrumental Variables
Some Tests of Specification for Panel Data
Large Sample Properties of Generalized Method of Moments Estimators
Workers' Remittances and the Real Exchange Rate
Exchange rates, trade liberalization and aid
Aid and the Dutch disease
Foreign aid and economic performance in Tanzania
Aid, Dutch disease, and manufacturing growth
The Purchasing-Power Parity Doctrine
Openness, Productivity and Growth
Booming Sector and De-Industrialisation in a Small Open Economy
Theoretical Notes on Trade Problems
| Highly cited | No |
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