Cambodia Development Institute

Title
Official Development Assistance and Foreign Direct Investment:
How Are They Affecting Economic Growth?

Abstract
Both Official Development Assistance and Foreign Direct Investment have been thought ofasimportant sources of foreign capital inflow,which could help economic growth for many developing countries. Hence, the current studyinvestigates the role of ODA and FDI in promoting economic growth in developing countries by using a panel data of 166 developing countries from 1980 to 2011. We empirically show that ODA and FDI have positive impacts on economic growth, butbecome negative when interacted. Our result demonstrates the possibility that ODA and FDI are substitutes for each other in promoting growth.