Cambodia Development Institute

How Aid Flow from DAC Donors and ODA Contribute Differently to Per capita income: Cambodia’s and Korea’s Case
Huy, Angtola, Norin, Pagna Sopheak, Srun Kea Vatey
February 18, 2013


Abstract

The issue of aid flow from external sources has been potentially discussed over a long period. Some previous studies attempts to investigate the relation between per capita income of people in a country and the aid flow from foreign donors. Although this study has a very similar characteristic to the pervious researches, this one give empirical evidence focused on the division between aid flow from Development Assistant Committee (DAC) donors and total official development aid (ODA) while the rest have ignored such a significant thing. Through some theoretical reviews, the contribution of foreign aid to per capita income of people in a country still remains controversial. However, this paper will provide a specific context of Cambodian and Korean economy. From this data analysis, aid flow from DAC donors has no significance associated with per capita income. Under the form of ODA, foreign aid from every country, both DAC and non-DAC donors, has an impact on the income per capita of people in both countries. The most importantly, a positive relation between dependent variable of per capita income and explanatory variable of ODA reveals the pessimistic view over the concern of aid dependency in Cambodia. For Korea as a donor of DAC, that per capita income has negative relation with ODA shows the potential outflow of aid from Korea to other countries.
Keywords: Aid flow from DAC donors, official development aid (ODA), per capita income (GDP per capita)