TITLE:
Can ODA Enhance Economic Development? Special Research on Australian Fund for the Growth Effectiveness in Laos
AUTHORS:
Soulivanh Chansombuth
KEYWORDS:
Assistant Funds, Australia and Laos, Long and Short Run, Vector Error Correction Model, Test of Correlation
JOURNAL NAME:
Theoretical Economics Letters,
Vol.13 No.5,
September
28,
2023
ABSTRACT: In Laos, ODA from Australia
pays over USD 40 million each year in the field of educational improvement. Australia
has been assisting and promoting the economy of Laos for several decades, which
establishes a good scenario of the two countries’ ties (between Australia and
Laos). Firstly, the author examines the relationship between the human
development index and economic growth by using a bivariate correlation testing
approach of two variables as provided by Pearson and Spearman, and the use of
the cointegration method by Johansen test on VECM analysis, this estimation is
vital for time series data. In the final finding, there was a result to denote
that, education can have a significant relation to enhance economic growth in
Lao PDR. Higher education reflects higher economic development by relying on
the test result of Pearson with a p-value
of .02 and the Spearman test with a p-value
of .049, of which the p-value was
less than .05. For VECM analysis, the result showed that education in both the
long and short run has a negative direction in relation to economic
development, in the short run the ODA from Australia showed an opposing
direction to growth, but in the long run, such ODA has a positive relation to
economic growth with significance. Finally, this paper detailed Laos’ future
policy on promoting investment in the field of technological development and
innovation; a suitable law and regulation for technological investment should
be effectively enacted for ODA in the field of educational improvement, eventually
good educational people can build investment and national economic development
of Laos.