Effects of aid on export competitiveness: A cross-country analysis

Date of Publication

2006

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Applied Economics

Subject Categories

Economics

College

Ramon V. Del Rosario College of Business

Department/Unit

Economics

Defense Panel Member

Myrna Austria

Ponciano Intal

Marvin Castell

Abstract/Summary

This paper will examine the cross-country effects of aid on the movements of the real exchange rate using annual data from 1990-1999 of 39 aid-receiving countries. Empirical evidences support the hypothesis that foreign aid inflow causes downward pressure on the real exchange rate of the recipient countries. The aid variable affects export competitiveness through the exchange rate and this will be deemed endogenous. The results showed that aid has a negative impact on the real exchange rate, giving the recipient countries a price disadvantage on their export commodities. This is one of the manifestations of the famous Dutch disease. Furthermore, not only does aid indirectly affect exports but it also exhibits a direct negative relationship due to resource shifts experienced by the tradable sector. In addition, given this adverse effect from aid inflows, the presence of corruption tends to worsen the impact on competitiveness.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU14317

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

132, [12] leaves : ill. (some col.) ; 28 cm.

Keywords

Economic assistance--Developing countries; Exports; Foreign exchange rates

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