Nexus between Foreign Aid and Economic Growth in Pakistan (1972-2021)

Abstract

Aid from other countries is essential to the financial well-being of emerging countries and makes a significant contribution to economic expansion. Since Pakistan is one of the countries that receives a substantial amount of foreign aid, the purpose of this research is to determine the impact that this assistance has had on the country's economic progress. In order to fulfill their responsibilities, developing countries like Pakistan become more reliant on financial assistance from other nations. The purpose of this study is to investigate the relationship that exists between international assistance and economic expansion in Pakistan during the course of the years 1972 through 2021. For the purpose of determining the empirical analysis, the auto-regressive distributed lag (ARDL) co-integration method is used. In order to determine this nexus, data on all of the contributing components is collected over a period of fifty years, beginning in 1972 and continuing through 2021. According to the data, there is an association between foreign aid and economic growth over the long term in Pakistan. However, the results showed that foreign assistance also had a positive impact on real GDP in the short term.