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Effectiveness of foreign aid in the light of millennium development goal on the education sector: a case study of Pakistan

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  • Anwar, Mumtaz
  • Rashid, Muhammad Khalid

Abstract

Aid recipient developing countries have remained stagnant and they are becoming more aid dependent after receiving large amount of aid from developed countries. This reality provokes vigorous debate on the effectiveness of aid. This study analyzes the effectiveness of aid in the education sector of Pakistan during the period 1973-2008.This study focuses on the second Millennium Development goal, which attributes to achieve universal primary education. We estimate econometric model to test the short run and long run relationship between foreign aid and gross primary enrollment in the education sector of Pakistan. For this purpose, Augumented Dickey Fuller test, Johansen Likelihood Ratio test and Vector Error Correction Methods are used. The results show that foreign aid has significantly increased primary school enrollment in Pakistan. The results proved the short run as well as long run relationship between foreign aid and primary school enrollment.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37141.

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Date of creation: 01 May 2011
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Publication status: Published in INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS 1.3(2011): pp. 377-389
Handle: RePEc:pra:mprapa:37141

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Keywords: Universal Primary Education; Millennium Development Goal; Foreign Aid;

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  1. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006. "Does Aid for Education Educate Children? Evidence from Panel Data," Kiel Working Papers 1290, Kiel Institute for the World Economy.
  2. E. N. Appiah & W. W. McMahon, 2002. "The Social Outcomes of Education and Feedbacks on Growth in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 38(4), pages 27-68.
  3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  4. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  6. Jan Pettersson, 2007. "Foreign sectoral aid fungibility, growth and poverty reduction," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1074-1098.
  7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  8. repec:ags:hiiedp:26374 is not listed on IDEAS
  9. McMahon, Walter W., 1998. "Education and Growth in East Asia," Economics of Education Review, Elsevier, vol. 17(2), pages 159-172, April.
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