Does Foreign Aid Affect Economic Growth in Pakistan? A Disaggregate Analysis
Keywords:
Economic Growth, Bilateral aid, Multilateral aid, Inflation, Trade openness, ARDL, ADF, Granger CausalityAbstract
Pakistan receives huge amount of aid flows every year like other developing countries but still stagnant and aid dependent. This reality forced a vigorous debate on effectiveness of aid. The objective of present study is to examine the effectiveness of foreign aid and other variables such as (bilateral aid, multilateral aid, inflation, trade openness, US aid, UK aid and Japanese aid) on economic growth of Pakistan over the period 1972-2014. When we disaggregate aid in terms of bilateral aid, multilateral aid, aid from United States, aid from UK and aid from Japan, all the aid sources showed insignificant relationship with the economic growth of Pakistan in the short run. Bounds test for Cointegration accepts the hypothesis that no long run relationship exists between the variables. So in the absence of long run relationship study takes the analysis towards short run relationship by using multivariate Granger Causality test. The causality test results showed that total foreign aid, bilateral aid, aid from United States and aid from UK does not causes economic growth significantly in Pakistan over the period 1972-2014. On the other hand multilateral aid and Japanese aid significantly causes growth. Granger Causality test results showsbi-directional causality between multilateral aid and economic growth. The study is useful for policy implications because results show that multilateral aid have significant relationship with economic growth in Granger Causality test. So authorities should give priority to multilateral aid over bilateral aid.
Published
Issue
Section
License
Copyright and Open Access Policy
The Review of Socio-Economic Perspectives (RSEP) is committed to the principles of open access and the widest possible dissemination of scholarly knowledge. The journal provides immediate and unrestricted access to all published content, enabling readers worldwide to freely read, download, copy, distribute, print, search, and link to the full texts of articles without financial, legal, or technical barriers.
RSEP supports the principles of the Budapest Open Access Initiative (BOAI), which advocates free and unrestricted access to peer-reviewed scholarly research.
Copyright Ownership
Authors retain the copyright of their published works.
By submitting and publishing their manuscripts in RSEP, authors grant the journal a non-exclusive right to publish, reproduce, distribute, archive, index, and preserve the work in electronic and other formats for scholarly communication purposes.
The journal does not require authors to transfer copyright ownership to the publisher. Authors remain the legal copyright holders of their work after publication.
Licensing Policy
Beginning with Volume 2025, all articles published in RSEP are distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).
Under the CC BY-NC 4.0 license, users are permitted to:
- Read, download, copy, and redistribute the material in any medium or format;
- Share the work with others;
- Adapt, remix, transform, and build upon the material;
provided that:
- Appropriate credit is given to the original author(s) and the journal;
- A link to the license is provided;
- Any changes made to the original work are clearly indicated;
- The material is not used for commercial purposes.
The full license terms are available at:
https://creativecommons.org/licenses/by-nc/4.0/
Previous Licensing Policy
Articles published before Volume 2025 were distributed under the Creative Commons Attribution 4.0 International License (CC BY 4.0).
The CC BY 4.0 license permits unrestricted use, distribution, adaptation, and reproduction in any medium, including commercial use, provided that appropriate credit is given to the original author(s) and source.
Articles published under CC BY 4.0 remain subject to the licensing terms that were in effect at the time of publication and are not retroactively relicensed.
Rights Retained by Authors
Authors retain the right to:
- Share their published articles on personal websites, institutional repositories, and academic networking platforms;
- Reuse parts or all of their work in future publications, books, teaching materials, and presentations;
- Deposit the published version of the article in repositories without embargo;
- Disseminate and promote their research freely.
Rights Granted to the Publisher
Authors grant RSEP the right to:
- Publish and disseminate the work as the original publisher;
- Archive and preserve the article permanently;
- Include the article in indexing, abstracting, and database services;
- Maintain the official version of record;
- Promote and distribute the published work through journal platforms and scholarly communication channels.
Open Access Statement
RSEP is a fully open-access journal. All articles are made freely available online immediately upon publication without subscription fees or access restrictions.
No embargo period is applied. Readers may access and use published content in accordance with the applicable Creative Commons license.
The journal believes that open access increases the global visibility, accessibility, usage, and impact of scholarly research while promoting the free exchange of scientific knowledge.
License Consistency
To ensure transparency and compliance with international indexing standards, the licensing information displayed on the journal website, article metadata, PDF files, and publishing platforms will remain consistent and accurately reflect the licensing terms applicable to each published volume.
