IMPACT OF OFFICIAL DEVELOPMENT ASSISTANCE ON SUSTAINABLE DEVELOPMENT OF PAKISTAN

Fouzia Perveen; Afaq Ali Khan

doi:10.46281/aesr.v8i1.1454

Fouzia Perveen Mohammad Ali Jinnah University, Pakistan
Afaq Ali Khan Mohammad Ali Jinnah University, Pakistan

DOI: https://doi.org/10.46281/aesr.v8i1.1454

Keywords: Official Development Assistance, Sustainable Development, Adjusted Net Savings.

Abstract

This research paper aims to find out the relationship between Official Development Assistance and sustainable development in Pakistan. Time series data was taken for the period of 42 years (1976 -2017). Sustainable Development is a dependent variable for which proxy variable of Adjusted Net Savings has been deployed. ODA (% of GNI), Inflation, Per Capita GDP and Trade (GDP %) have been used as explanatory variables. Augmented Dickey-Fuller Test has been applied to examine the nature of the data as time series data may contain unit root problems. ADF test confirms mixed order of integration for the selected variables, hence Autoregressive Distributed Lag (ARDL) Approach was applied to find out the long-run relationship among the considered variables. Estimation of Error Correction Regression resulted in a significant long-run relationship between ODA and Sustainable Development. ECM Regression also signifies the negative and significant value of the speed of adjustment term confirming that the model is stable and convergent towards the equilibrium. Overall results of this study confirm a positive and highly significant relationship between ODA and the measure of sustainable development in Pakistan. Therefore it is recommended that attention should be given to drawing on foreign assistance and it should be subject to the transparent and efficient practices applied in the Aid Allocation. It significantly improves the overall welfare of Pakistan.

Author Biographies

Fouzia Perveen, Mohammad Ali Jinnah University, Pakistan

Department of Economics, Faculty of Business Administration, Mohammad Ali Jinnah University, Karachi, Pakistan

Afaq Ali Khan, Mohammad Ali Jinnah University, Pakistan

Department of Economics, Faculty of Business Administration, Mohammad Ali Jinnah University, Karachi, Pakistan

References

Ali, S., & Ahmed, N. (2013). A Time Series Analysis of Foreign Aid and Income Inequality in Pakistan. Global Journal of Management and Business Research

Anwar, M. (2007). Foreign Aid to Pakistan: A Critical Evaluation. http://www.jstor.org/stable/41501694.

Asongu, S. A., & Nnanna, J. (2018). Foreign aid and sustainable inclusive human development in Africa. DBN Journal of Economics and Sustainable Growth.

Basnet, H. (2013, November). Foreign Aid, Domestic Savings, And Economic Growth In South Asia. International Business & Economics Research Journal, 12, 3-6.

Boulanger, P. (2008). Sustainable development indicators: a scientific. OpenEdition Journals, 10-14.

Chenery, H. B., & MacEwan, A. (1966). Optimal Patterns of Growth and Aid The Case of Pakistan. The Pakistan Development Review.

Chenery, H. B., & Strout, A. M. (1966). Foreign assistance and economic development. American Economic Reveiw, 679-733.

Combes, J.-L., Kinda, T., Plane, P., & Ouedraogo, R. (2019). Financial flows and Economic growth in developing countries. Economic Modelling 83.

Edwards, S. (2015, August). Economic Development and the Effectiveness of Foreign Aid: A Historical Perspective. Kyklos: International Review of Social Sciences, 68(3), 277-316. doi:https://doi.org/10.1111/kykl.12084

Emas, R. (2015). The Concept of Sustainable Development: Definition and Defining Principles. Florida International University.

Ezaki, M. (1975). On the Two-Gap Analysis of Foreign Aid. Journal of Southeast Asian Studies.
Hamilton, K. (2000, October). Genuine Saving as a Sustainability Indicator. Environment Department Papers,22744, The World Bank.

Hussain, I. (2005, May 20th). Lecture delivered at No. 18 Air War Course at PAF Air War College, Karachi. National Economy and Impact of Foreign Aid. Karachi, Sindh, Pakistan: Institute of Business Administration.

Irandoust, M., & Erricson, J. (2005). Foreign aid, domestic savings and growth in LDCs: An Application of Likelihood-based panel cointegration. Economic Modelling, 616-627.

Katharine, Bolt; Mampite, Matete; Michael Clemens;. (2002). Manual for Calculating Adjusted Net Savings. Washington DC: Environment Department, World Bank.

Khan, M. A., & Ahmed, A. (2007). Foreign Aid—Blessing or Curse: Evidence from Pakistan. The Pakistan Development Review, 46, 215-240.

Khan, M., & Ahmed, A. (2007). Foreign Aid—Blessing or Curse: Evidence from Pakistan. The Pakistan Development Review.

Khan, N., & Rahim, E. (1993). Foreign Aid, Domestic Savings and Economic Growth (Pakistan: 1960 to 1988). The Pakistan Development Review, 1157-1167.

Khan, S. R. (1997). Has Aid Helped in Pakistan? The Pakistan Development Review, 4-5.

Lohani, S. (2004). Effect of Foreign Aid on Development: Does More. Illinois USA: Digital Commons, Illinois Wesleyan University.

Mahembe, E., & Odhiambo, N. M. (2019). Foreign aid and poverty reduction: A review of international literature. Cogent Social Sciences.

Malik, S. J., Hussain, M., & S.Sherazi, N. (1994). Role of Infaq in Poverty Alleviation in Pakistan. The Pakistan Development Review.

Malik, S., Hayat, M. K., & Hayat, M. U. (2010). External Debt and Economic Growth: Empirical. International Research Journal of Finance and Economics.

Michel, J. (2016). Beyond Aid-The integration of Sustainable Development in the Coherent International Agenda. The Center for Strategic and International Studies. Lanham: ROWMAN & LITTLEFIELD .

Mohey-ud-din, G. (2005). Impact of Foreign Aid on Economic Development in Pakistan (1960-2002). Munich Personal RePEc Archive.

Papanek, G. F. (1973). Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries. Journal of Political Economy.

Pillarisetti, J. R. (2005). The World Bank’s genuine savings measure and sustainability. Elsevier, 1-3.
Radelet, S. (2006). A Premier on Foreign Aid. Centre for Global Development.

Rana, Z., & Koch, D. (2020). Why fungibility of development aid can be good news: Pakistan case study. World Development Perspectives. doi:https://doi.org/10.1016/j.wdp.2020.100248

Salman, A., & Hui, X. F. (2009). Three Decades and More of Foreign Aid in Pakistan: Impact on GDP. Conference Paper.

Sen, A. (1988). The Concept of Development. In S. T. Chenery H, Handbook of Development Economics (pp. 1-18). Amsterdam: North Holland .

Williams, M. (2016). Aid, sustainable development and the environmental crisis. The International Journal of Peace Studies.

Younis, F., Chaudhary, M. A., & Akbar, M. (2015). Pattern of Development and Sustainable Economic Growth in Pakistan; A descriptive Analysis. Munich Personal RePEc Archive-MPRA.