Empirical Analysis of the Macroeconomic impact of Foreign Aid on Pakistan Economy (1972-2014)

Journal of Accounting and Finance in Emerging Economies

Danish Alam¹  Amjad Amin¹  Hifsa Bibi² 

[1] Faculty Member, Department of Economics, University of Peshawar, Pakistan;Research Scholar, Department of Economics, University of Peshawar, Pakistan;

关键词: ODA;    Foreign Aid;    ARDL;    Corruption Perception Index;    Private Domestic Investment;   

DOI  :  

来源: DOAJ

【 摘 要 】

Although Pakistan receives large quantity of foreign aid, like other developing countries, but it remains more dependent on foreign assistance for economic development since independence.  This situation has commenced a vigorous discussion on aid-growth effectiveness. This research work evaluates the macroeconomic impact of foreign aid on Pakistan economy by using secondary data. The empirical analysis is based on ARDL cointegration approach after testing for unit root, using the data for the period 1972-2014. The findings suggest there is no long run relationship between Foreign aid and Economic Growth. However, there exists negative short run relation between Foreign aid and Economic Growth of Pakistan. Based on the study findings, the study recommends that government of Pakistan should find alternate sources of financing as the relation between foreign aid and economic growth is found negative and insignificant. The in depth analysis of the study made it evident that allocation of aid to those sectors of the economy which really needs development, is more productive, provided that the country should use aid funds in the right direction, as corruption less economy prosper more rapidly.

【 授权许可】

Unknown