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


  • Anwar, Mumtaz
  • Rashid, Muhammad Khalid


Most of the developing countries are becoming more aid dependent with the passage of time. This bleak reality provokes debate on aid effectiveness. This paper analyzes the effectiveness of aid on the health sector of Pakistan over the period 1973-2008. The study focuses on the health sector in the light of Millennium Development Goal; reducing child mortality. We estimate an econometric model to test the short and long run relationship between foreign aid and infant mortality rate in the health sector. In this context, different tests i.e. Augumented Dickey Fuller test, Johansen Likelihood Ratio test and Vector Error Correction Method are used. The results indicate that there is short run and long run relationship between foreign aid and infant mortality rate. The results show that one percent increase in foreign aid will decrease the infant mortality rate by 0.4 percent. This study suggests that an increase aid in this sector will result in better health conditions.

Suggested Citation

  • Anwar, Mumtaz & Rashid, Muhammad Khalid, 2011. "Effectiveness of foreign aid in the light of millennium development goal on the health sector: a case study of Pakistan," MPRA Paper 37142, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37142

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    References listed on IDEAS

    1. Susanna Wolf, 2007. "Does Aid Improve Public Service Delivery?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 650-672, December.
    2. Wolf, Susanna, 2007. "Does Aid Improve Public Service Delivery?," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
    3. Marijn Verhoeven & Sanjeev Gupta & Erwin H Tiongson, 1999. "Does Higher Government Spending Buy Better Results in Education and Health Care?," IMF Working Papers 99/21, International Monetary Fund.
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    More about this item


    Infant Mortality rate; Millennium Development Goal; Foreign Aid;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • I10 - Health, Education, and Welfare - - Health - - - General

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