Conditional Effect of Foreign Aid on Production Efficiency in Developing Countries

Abstract

This study analyzes the conditional effect of foreign aid on production efficiency in selected 80 developing countries during the period of 2005-2017. This study involves parametric and non-parametric data analysis approach. The DEA (non-parametric) was used to get the production efficiency scores, while a panel Tobit regression analysis had conducted to measure the conditionality effect of foreign aid on the production efficiency. The results indicated that the conditional effect of foreign aid has a positive significant influence on production efficiency of developing countries during the period of study. This finding implies the positive impact foreign aid on production efficiency depends on the conditional effect of foreign aid.

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