scholarly journals Foreign Aid, Domestic Savings and Economic Growth (Pakistan: 1960 to 1988)

1993 ◽  
Vol 32 (4II) ◽  
pp. 1157-1167 ◽  
Author(s):  
Naheed Zia Khan ◽  
Eric Rahim
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Negative Relationship ◽  
Causal Chain ◽  
Domestic Investment ◽  
Quantitative Evidence ◽  
Explanatory Variables ◽  
Savings Rate ◽  
Domestic Savings ◽  
The Relationship

One of the core tenets of foreign aid theory, particularly as encapsulated in the two-gap model, is that the insertion of foreign resources via free grants, loans, direct investment etc., into a developing economy sets in motion a causal chain of positive influences in the following broad mannerl: aid' ~ increase in investible resources ~ increase in domestic investment ~ more rapid rate of economic growth. Spirited and specific challenges to this approach came from many critics, supported greatly by a number of broad theoreticaF and empirical analyses. For a large part of the latter, the available evidence pointed to a negative relationship between aid and domestic savings. The evidence was largely based on crosssectional data, 'showing that, there was, in addition, reason to suggest a negative relationship between aid and economic growth. 3 The aim of this study is to provide some quantitative evidence on the relationship between foreign aid, domestic savings and economic growth for Pakistan. The analysis is carried out in three parts. Part one contains the methodology and the description of the data. Part two explores the correlation between aid and several other explanatory variables with Pakistan's savings rate, while part three attempts to analyse and explain the regression findings in terms of the effect of aid on economic growth.

scholarly journals Foreign Aid, Domestic Savings and Economic Growth in Selected MENA Countries

2016 ◽  
Vol 6 (1) ◽  
pp. 352 ◽  
Author(s):  
Mahmoud Mohammed Sabra ◽  
AbdelHakeem Eltalla
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
System Analysis ◽  
Negative Impact ◽  
Trade Openness ◽  
Negative Relationship ◽  
Dynamic Panel Data ◽  
Mena Countries ◽  
Domestic Savings

<p class="ber"><span lang="EN-GB">Foreign aid can have either a positive or a negative impact on economic growth. The role of foreign aid in supporting growth by completing domestic savings has been a subject of substantial argument. In this study, we explore the role of foreign aid, trade openness, investment, domestic savings and economic growth in eight MENA countries (Morocco, Algeria, Egypt, Palestine, Syria, Jordan, Lebanon and Tunisia) for the period from 1977 to 2013. The estimation has been done using simultaneous equation model and dynamic panel data system analysis. A negative relationship is found between economic growth and foreign aid. The negative impact of foreign aid on economic growth could be due to presence of Dutch disease and bad policy environment. In addition, foreign aid seems to crowd out domestic savings rather than complementing it. The effects of trade openness and domestic investment on economic growth are significantly positive.</span></p>

Does institutional quality affect capital mobility? Evidence from developing countries

2009 ◽  
Vol 5 (2) ◽  
pp. 207-223 ◽  
Author(s):  
JAVED YOUNAS
Keyword(s):  
Developing Countries ◽  
Foreign Aid ◽  
Capital Mobility ◽  
Positive Impact ◽  
Institutional Quality ◽  
Democratic Accountability ◽  
Domestic Investment ◽  
Savings Rate ◽  
Domestic Savings ◽  
The Impact

AbstractThis paper uses an augmented Feldstein–Horioka savings–investment methodology to examine the impact of institutional quality on the degree of capital mobility in developing countries. A high correlation between domestic investment and domestic savings can arise from the presence of institutional rigidities restricting the movement of capital across borders. We find that including different aspects of institutional quality raises the coefficient of the savings rate, implying lower capital mobility. However, the improvement in institutional quality that strengthens the legal system, reduces investment risks, and ensures democratic accountability, increases capital mobility in developing countries. Inclusion of foreign aid also has a positive impact on the coefficient of the savings rate.

THE RELATIONSHIP BETWEEN DOMESTIC INVESTMENT AND QUALITY ECONOMIC GROWTH IN THAILAND

2020 ◽  
Vol 14 (3) ◽  
pp. 691-704
Author(s):  
Muhammad Raza ◽  
◽  
Talla M. Aldeehani ◽  
Ali Saleh Alshebami
Keyword(s):  
Economic Growth ◽  
Domestic Investment ◽  
The Relationship

scholarly journals Can One Promote a Delegation of the Bilateral Aid to Multilateral Donors to Improve Foreign Aid Effect on Economic Growth in ECOWAS (Note 1) Countries?

2019 ◽  
Vol 2 (1) ◽  
pp. 51
Author(s):  
W. Jean Marie Kébré
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Least Squares ◽  
Foreign Aid ◽  
Bilateral Aid ◽  
Multilateral Aid ◽  
Multilateral Institutions ◽  
Negative Effect ◽  
High Degree ◽  
The Relationship

<p><em>This article analyzes the relationship between external aid and economic growth in the ECOWAS region, with a focus on bilateral and multilateral aid effects. The key idea behind this analysis is an argument of Svensson</em><em> </em><em>(2000)</em><em> that multilateral aid is more effective than bilateral aid because of the high degree of altruism of bilateral donors. He therefore suggested a delegation of bilateral aid to multilateral institutions. To appreciate his suggestion, this analysis used panel data from the 16 ECOWAS countries from the period 1984 to 2014. The results of the estimates, based on the dynamic least squares estimator (DOLS), show a negative effect of foreign aid on economic growth. This negative effect on economic growth persists when the components of aid are introduced into the model. In addition, results highlight that governance is a channel through which foreign aid affect positively economic growth. In these conditions, bilateral aid is more effective on economic growth than multilateral aid. These results about foreign aid received by ECOWAS countries invalidates</em><em> </em><em>Svensson’s</em><em> </em><em>(</em><a title="Svensson, 2000 #5" href="#_ENREF_1"><em>2000</em></a><em>)</em><em> theory. Therefore, a delegation of bilateral aid to multilateral institutions is not relevant because bilateral aid contributes more to economic growth if governance is taken into account.</em></p>

scholarly journals AID AND GROWTH IN BANGLADESH: A REASSESSMENT

2018 ◽  
pp. 422-440
Author(s):  
Sharif Hossain ◽  
Rajarshi Mitra ◽  
Thasinul Abedin
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Inflation Rate ◽  
Government Expenditure ◽  
Real Income ◽  
Domestic Investment ◽  
Real Gdp ◽  
Long Run ◽  
Short Run ◽  
Per Capita

Although the amount of foreign aid received by Bangladesh as a share of GDP has declined over the years, Bangladesh remains one of the heavily aiddependent countries in Asia. The results of most empirical studies that have examined the effectiveness of foreign aid or other forms of development assistance for economic growth have varied considerably depending on the econometric methodology used and the period of study. As the debate and controversy over aid-effectiveness for economic growth continue to grow, this paper reinvestigates the short-run and long-run effects of foreign aid received on percapita real income of Bangladesh over the period 1972–2015. A vector error correction model is estimated. The results indicate lack of any significant short-run and long-run relation between foreign aid and per-capita real income. Results further indicate short-run unidirectional causalities from per-capita real GDP to domestic investment (in proportion to GDP), from government expenditure (in proportion to GDP) to inflation rate, from inflation rate to domestic investment (in proportion to GDP), and from domestic investment to foreign aid (as percentages of GDP). Short-run bidirectional causality is observed between per-capita electricity consumption and per-capita real GDP, and between per-capita real GDP and government expenditure (in proportion to GDP).

Corruption, Business Climate, and Economic Growth

2015 ◽  
pp. 1156-1179
Author(s):  
Harish C. Chandan
Keyword(s):  
Economic Growth ◽  
Political Institutions ◽  
Business Environment ◽  
Domestic Investment ◽  
Business Climate ◽  
Transparency International ◽  
Leadership Management ◽  
Economic Freedom Index ◽  
The Relationship

Corruption is globally pervasive. Defined as abuse of entrusted power for private gain (Transparency International, 2013), corruption represents a set of economic, social, cultural, and political practices that are secretive and rooted in greed, ambition, or quest for power. This chapter reviews causes of corruption including the macro- and micro-level determinants of corruption such as leadership, management, and organizational culture. Various subjective and objective measures of corruption are discussed. Transparency International's Corruption Perception Index (CPI) and Heritage Foundation's Economic Freedom Index (EFI) are reviewed. The World Bank's Business Environment and Enterprise Performance Survey (BEEPS), Doing Business Indicator (DBI), and World Bank Institute's Governance Indicator (WBI-GI) are also reviewed, as is the role of global anti-corruption agencies and various instruments. Additionally, the relationship between corruption and foreign domestic investment, economic growth, and economic and political institutions are considered, as are anti-corruption intervention strategies for corruption and business ethics training.

Global Trends in Domestic savings and Longevity- Implications for India

2021 ◽  
pp. 111-118
Author(s):  
Thilak Venkatesan ◽  
Venkataraman R
Keyword(s):  
Economic Growth ◽  
Developed Countries ◽  
The Other ◽  
Demographic Dividend ◽  
Policy Action ◽  
Global Trends ◽  
Domestic Savings ◽  
The Developed Countries ◽  
Developed Nations ◽  
The Relationship

Demographic dividend and the lowest median age among the earning population propels consumption and growth in India. Among the emerging economies, China had the leverage for growth through exports until 2008. India benefited by demographic dividend and this translates to providing income and thereby increases savings. On the other hand, the developed countries are experiencing problems of an aging economy, a deflationary scenario, and a pension burden. India, with its major workforce in the unorganized and private sector, needs to recognize the need for forward-looking policies that stimulate savings for a better lifestyle post-retirement. The study was focussed on the relationship between longevity (life expectancy), and domestic savings. The research observed divergence between the developed nations and India. A more futuristic policy action is suggested to motivate savings as the increase in population and higher levels of economic growth can be achieved with more domestic savings.

scholarly journals Financial Development and Economic Growth in ASEAN-5 Countries

2018 ◽  
Vol 20 (1) ◽  
pp. 57-71 ◽  
Author(s):  
Chinnasamy Agamudai Nambhi Malarvizhi ◽  
Yashar Zeynali ◽  
Abdullah Al Mamun ◽  
Ghazali Bin Ahmad
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Economic Efficiency ◽  
Capital Accumulation ◽  
Physical Capital ◽  
Significant Positive Effect ◽  
Domestic Investment ◽  
The Relationship ◽  
Physical Capital Accumulation ◽  
Positive Effect

This article explores the relationship between financial sector development and economic growth, using a sample of ASEAN-5 countries (Malaysia, Indonesia, Singapore, Thailand and Philippines) from 1980 to 2011. More specifically, this study investigates whether higher levels of financial development (FD) are significantly and robustly correlated with faster current and future rates of economic growth, physical capital accumulation and economic efficiency improvements. Findings of this study revealed that FD has a significant positive effect on economic growth. However, the estimated models show that the influence of FD, as a determinant for economic growth of ASEAN-5 countries, is less than that of domestic investment and export.

Foreign Aid, FDI and Economic Growth in South-East Asia and South Asia

2020 ◽  
pp. 097215091989095
Author(s):  
D. Tripati Rao ◽  
Narayan Sethi ◽  
Devi Prasad Dash ◽  
Padmaja Bhujabal
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
East Asia ◽  
Foreign Aid ◽  
South Asia ◽  
Low Income ◽  
Trade Openness ◽  
Financial Assistance ◽  
South East Asia ◽  
Domestic Investment

We examine the interrelationship among foreign aid, foreign direct investment (FDI) and economic growth in South-East Asia (SEA) and South Asia (SA) during 1980–2016. The findings from alternative empirical estimations suggest that while foreign aid is negatively associated with FDI as well as growth, FDI positively influences growth. Further, governmental financial assistance to private sector for domestic investment turns out to be important in all empirical estimations insofar as positively associated with FDI flows as well as growth. We, therefore, infer that low-income SEA and SA economies should focus on channelizing governmental financial assistance to private sector for domestic investment, macroeconomic stabilization, trade openness, and efficient utilization of aid flows, in order to attract, absorb and reap the benefits of complementing FDI flows and sustaining higher economic growth.

FDI and economic growth: empirical evidence from Pakistan

2016 ◽  
Vol 32 (1) ◽  
pp. 63-76 ◽  
Author(s):  
Naqeeb Ur Rehman
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Human Capital ◽  
Time Series Data ◽  
Negative Relationship ◽  
Series Data ◽  
Literacy Rate ◽  
Content Type ◽  
Low Level ◽  
The Relationship

Purpose – The purpose of this paper is to investigate the relationship between FDI and economic growth. Two models have been used to analyse the time series data on Pakistan from 1970 to 2012. This paper contributes to the existing literature by examining the different empirical methods to estimate the relationship between FDI and economic growth. The vector error correction model (VECM) results suggest that FDI depends on the economic growth but this relationship is not true vice versa. The second model showed that FDI, human capital and exports are important factors of economic growth. However, the negative relationship between interactive variables (FDI and human capital) and economic growth indicates that low level of human capital affect the economic growth of Pakistan. Design/methodology/approach – Used time series data (1970-2012) for empirical analysis. Findings – The VECM results suggest that FDI depends on the economic growth but this relationship is not true vice versa. The second model showed that FDI, human capital and exports are important factors of economic growth. However, the negative relationship between interactive variables (FDI and human capital) and economic growth indicates that low level of human capital affect the economic growth of Pakistan. Research limitations/implications – The limitations of this empirical paper are as follows: it would be better to use secondary school enrolment (per cent) to measure human capital instead adult literacy rate. Similarly, the non-availability of R & D data on Pakistan limited the scope of the paper to measure the role of absorptive capacity of domestic and its relationship with FDI. The results of this paper are specifically related to Pakistan and cannot be generalized to other countries. Practical implications – This empirical study implies that Pakistan should improve its economic growth. The robust policies are required to increase the literacy rate of the country. Higher human capital will attract more FDI into the economy and may reduce the unemployment. This would increase the national output of the country and their national income level. Presently, Pakistan is going through war on terror and foreign firms are reluctant to invest. A stable and secure business environment will ultimately inject foreign direct investment into Pakistan. Originality/value – This paper is first time analyse the time series data to explore the relationship between FDI and economic growth. A new approach has been used called VECM.

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