Impact of Foreign Aid on Economic Development in Pakistan [1960-2002]

Abstract

The Two-Gap Model suggests that the Poor countries have to rely on the foreign resources to fill the two Gaps: Import-Export Gap and the Savings-Investment Gap. There are many forms of the foreign resources like FDI (Foreign Direct Investment), External loans & Credit, technical assistance, Project & non-project aid etc. But UDC’s (including Pakistan) don’t have the investment friendly policies. So, they have to rely on the Foreign aid and Debt rather than FDI and portfolio investments. The role of these external resources always remains questionable. This paper analyzes the trends and structure of the foreign aid in Pakistan during 1960-2002 and its role and effectiveness in the economic development in Pakistan.Foreign capital inflows (FCI); Foreign Aid; Economic Development; Foreign Economic Assistance; Official Development Assistance (ODA); Foreign Debt Burden; Aid and Growth; Trends and Structure of Aid; Aid Effectiveness