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Effectiveness of Foreign Aid and Human Development


  • Nasim Shah Shirazi

    (Department of Economics, Faculty of Economics and Management Sciences, International Islamic University, Malaysia (IIUM).)

  • Turkhan Ali Abdul Mannap

    (Department of Economics, Faculty of Economics and Management Sciences, International Islamic University, Malaysia (IIUM).)

  • Muhammad Ali

    (District Management Group, Government of Pakistan)


Foreign aid has been contributory towards fostering broad-based development and complementing national development initiatives in the recipient countries. This paper analyses the question of aid effectiveness towards the achievement of goals in the special context of a set of social outcomes in Pakistan. More specifically, the paper focuses the core question that ‘how’ and ‘how far’ foreign aid has affected the ‘health’, ‘education’, and overall ‘human development index’ in Pakistan. Our result shows that there is feedback Granger causality between GI and ODA. That is, Economic growth induces ODA and ODA Granger cause economic growth. As far as Education index, Human development index and life expectancy index concerned, there are only unidirectional Granger causality from ODA to Education index, Human development index and life expectancy index. This is consistent with other literature that ODA contribute to human development.

Suggested Citation

  • Nasim Shah Shirazi & Turkhan Ali Abdul Mannap & Muhammad Ali, 2009. "Effectiveness of Foreign Aid and Human Development," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 853-862.
  • Handle: RePEc:pid:journl:v:48:y:2009:i:4:p:853-862

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    Cited by:

    1. Umair Shahzad, 2014. "Impact Assessment of Natural Disasters upon Economic Growth in Pakistan," 2nd International Conference on Energy, Regional Integration and Socio-Economic Development 7373, EcoMod.

    More about this item


    Effectiveness; Human Development; Foreign Aids; Granger Causality;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages


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