Ahmed, Vaqar and Wahab, Mohammad Abdul (2011): Foreign assistance and economic growth: evidence from Pakistan 1972 - 2010.
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This paper examines the relationship between foreign assistance and economic growth for the period 1972 to 2010. Past literature indicates that due to low domestic resource mobilization Pakistan had to resort to various forms of foreign assistance on a regular basis. Using time series data since 1972 and employing Johansen maximum likelihood procedure we show that foreign assistance in the absence of macroeconomic stabilization and structural reforms has a negative relationship with real per capita GDP. However national savings as percentage of GDP show a positive relationship with real per capita GDP. Pakistan has a long history of dependence on multilateral and bilateral development partners. Over the decades the share of grants as percentage of total foreign assistance has declined forcing the country to procure loans at harsh conditionalties. Given the positive impact of national savings on economic growth there is an urgent need for improving the tax base, promoting instruments that encourage savings culture in the private sector and attracting remittances from abroad. These increased savings would then have to be channelized towards productive investments which in turn require pro market reforms.
|Item Type:||MPRA Paper|
|Original Title:||Foreign assistance and economic growth: evidence from Pakistan 1972 - 2010|
|Keywords:||Foreign assistance, Economic Growth, National Savings|
|Subjects:||F - International Economics > F3 - International Finance > F35 - Foreign Aid
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth
|Depositing User:||Vaqar Ahmed|
|Date Deposited:||24. Apr 2011 05:00|
|Last Modified:||11. Feb 2013 22:32|
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