IDEAS home Printed from https://ideas.repec.org/a/wej/wldecn/499.html
   My bibliography  Save this article

Foreign Assistance and Economic Growth

Author

Listed:
  • Muhammad Abdul Wahab
  • Vaqar Ahmed

Abstract

This paper examines the relationship between foreign assistance and economic growth for the period 1972 to 2010. Past literature indicates that, due to low domestic resource mobilisation, Pakistan had to resort to various forms of foreign assistance on a regular basis. Using time series data since 1972 and employing statistical tests we show that foreign assistance in the absence of macroeconomic stabilisation and structural reforms has a negative relationship with real per capita GDP. However, national savings as percentage of GDP show a positive relationship with real per capita GDP. Pakistan has a long history of dependence on multilateral and bilateral development partners. Over the decades the share of grants as percentage of total foreign assistance has declined, forcing the country to procure loans at harsh conditionalities. Given the positive impact of national savings on economic growth there is an urgent need for improving the tax base, promoting instruments that encourage savings culture in the private sector and attracting remittances from abroad. These increased savings would then have to be channelled towards productive investments, which in turn require pro-market reforms.

Suggested Citation

  • Muhammad Abdul Wahab & Vaqar Ahmed, 2011. "Foreign Assistance and Economic Growth," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(4), pages 137-152, October.
  • Handle: RePEc:wej:wldecn:499
    as

    Download full text from publisher

    File URL: http://www.world-economics-journal.com/Contents/ArticleOverview.aspx?ID=499
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wej:wldecn:499. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ed Jones). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.