Foreign Aid Philippines Essay

Literature review:

This section is divided into two parts: in the part one theoretical literature is presented, and in the second part the empirical literature.

1. Theoretical Literature:

Aid is a very broad concept but when the word aid is used in international relations’ sphere it means foreign aid that a country receives. There are different views on what to be included in the aid. United Nations (UN) accepts only economic assistance as aid but the donors of the aid include almost every type of spending in the recipient countries in aid.

“Foreign aid is the international transfer of capital, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military or emergency humanitarian.” (Victoria Williams, 2015)

“The

First, the author identified the various types and forms of foreign aid in the Philippines. Second, the costs and benefits of foreign aid have been examined along with establishing the factors affecting the effectiveness of foreign aid. The results of econometrical model show that the coefficients of all the explanatory variables except social aid have expected signs and statistically significant. The coefficients of foreign direct investment and Official Development Assistance measured as foreign aid per capita have a positive impact on Gross Domestic Product (GDP) growth as it was expected.

Another contribution to this issue is the analysis by Feeny (2005) investigating the impact of foreign aid on economic growth of Papua New Guinea (PNG) and used the time series data from 1965 to 1999. His paper examined that whether aid effectiveness is conditional on levels of economic policy and governance. He found that aid is more effective when in Papua New Guinea (PNG) the program of World Bank Structural Adjustment (SAP) was implemented so it indicates that the aid is more effective when combined with good