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The Economics of Foreign Aid: Time Series Evidence from a Less Developed Country (LDC)

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  • Md Mahadee Hassan

Abstract

Empirical literature on aid-growth nexus mostly centered within cross-country framework exploiting typical ordinary least squares (OLS) estimation. As a result, scarcity prevails studies empirically examine country-specific causes of aid-growth nexus exercising distinct methods. This study aims to fill this gap, taking the case of Bangladesh- a leading aid recipient country. Empirical findings based on vector error correction modeling and Granger causality test unearth absence of long-run and short-run causality of aid on GDP growth. Therefore, this study argues that although aid remains a major component of LDCs macroeconomic framework; however, it is yet to emerge as a significant player in their economic growth.

Suggested Citation

  • Md Mahadee Hassan, 2017. "The Economics of Foreign Aid: Time Series Evidence from a Less Developed Country (LDC)," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 4(2), pages 75-90.
    • Handle: RePEc:aoj:ajeaer:v:4:y:2017:i:2:p:75-90:id:233
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    Cited by:

    1. Fahmida Khatun & Syed Yusuf Saadat & Md. Kamruzzaman, 2019. "FINANCE FOR SDGs: Addressing Governance Challenge of Aid Utilisation in Bangladesh," CPD Working Paper 125, Centre for Policy Dialogue (CPD).

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