TO EXPLORES THE RELATIONSHIP BETWEEN FOREIGN AID AND ECONOMIC GROWTH IN PAKISTAN

The purpose of the study is to examine the relationship between foreign aid and economic growth in Pakistan by employing OLS model. The results produced by our study indicate the insignificance of ODA in promoting economic growth. Though the results are positive in promoting growth, but not significant on one hand it reflects the inappropriateness of the current international assistance programme. Among the three main sources of finance we have found FDI and gross saving to be consistently significant in the cross country regression analysis. Moreover, Pooled OLS estimate indicate the economic growth increase by about 50% as a result on a percentage increase in gross saving. The regression model has produced somewhat robust results affecting the GDP annual growth rate. Regarding inflation the OLS and RE estimates show negatively significant results at 5% confidence interval.Key Words: GDP,ECONOMIC GROTH, FOREIGN AID, FDI