ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Foreign Aid Loans and Economic Growth in Vietnam

Hiroaki Sakurai

Correspondence: Hiroaki Sakurai, hsakurai@shonan.bunkyo.ac.jp

Bunkyo University, Japan

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Abstract

This paper examines the productivity of foreign aid in Vietnam, in two ways. First, the effect of foreign aid upon economic growth in Vietnam as a whole is studied using time series data from 1994 to 2017. Second, the effect of the yen loan, or governmental aid loan from Japan, in 34 provinces out of 63 is studied using panel data from 2001 to 2016. The effect of foreign aid is still uncertain, and the aim is to clarify it. Two points are found. First, no effect of foreign aid to Vietnam has been found using the time series data for the entire country. Second, the increase in productivity due to the yen loan has not been estimated, either. Although the impact from the foreign aid to the economic growth is not estimated, it may include Vietnamese special reasons. Since the main portion of foreign aid to Vietnam came after 1994, most infrastructure facilities are contributing relatively in a short term. This finding is likely to change in future, since infrastructure established recently with the loan will continue to contribute to economic growth in Vietnam.

Keywords:

  Foreign Aid, Productivity, Vietnam


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