Spatial dependence and heterogeneity regime effect on the allocation of Korea’s international aid to recipients

Abstract

This study uses spatial heterogeneity regime models to analyze the allocation of Korea’s official development assistance (ODA) to 55 recipient countries, and examines whether recipient countries’ level of democracy or political stability, distance from Korea, trade, gross domestic product, global ODA, or global foreign direct investment have spatial and spatial heterogeneity regime effects on the determinants of Korea’s ODA to recipient countries. Despite the spatial effects, if we use the non-special ODA model the estimators will be inconsistent. However. the empirical results found new facts that the allocation of Korea’s ODA have the spatial dependence effects and spatial heterogeneity effects across four regimes, such that the estimation of the determinants of Korea’s ODA differs across Asia, Africa, Europe, and Pacific and Central America. Therefore, the spatial heterogeneity regime model is needed to analyze the determinants of Korea’s ODA and to adopt more effective ODA policies.