Has Aid Helped in Pakistan?
SHAHRUKH RAFI KHAN
This paper has a two-fold objective: first, to realise the wrong on which Pakistan receives aid and whether its debt situation is sustainable, and second, to examine the cushion of aid and debt on scotch growth. It is found that there is unretentive encouraging that can be said about how the terms on which Pakistan has received aid over time swallow changed, and its current debt situation is not sustainable. Also reported is the abbreviation done elsewhere which shows that aid has a contradict (Granger) causative impact on GDP, and aid has a robust negative impact on economic growth after haughty for supplyside shocks. We provide various reasons for this negative association.
1. INTRODUCTION Aid surmise in early years of thinking on economic development was straightforward. The developing countries were perceived to be in withdraw of substantial investings in radical and capital which could not be financed internally. According to the traditional two-gap theory, aid was necessary to bridge two the savings-investment gap and the trade gap in developing countries and was thus considered indispensable.
Aid was advocated for establishing the preconditions for growth by strengthening institutions and building infrastructure and for enhancing growth via resources for investment. The increase in economic activity generated by aid supported investments was expected to increase output growth, lastly generating enough income to render aid superfluous. Ridell (1987) and White (1992) present racy reviews of the long and as yet unresolved debates. For applied economists, the inwardness is that most attempts at assessing the impact of aid on saving, investment and growth suffer from various flaws. These include unresolved hypothetical issues, faulty data, particularly for cross-country analysis, specification errors that call into dubiousness the scientific rigor...If you want to get a full essay, ramble it on our website: Ordercustompaper.com
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