Examining the Historical Trends in the Relationship Between External Economic Aid and Economic Growth Dynamics in Pakistan

Abstract

Recent research aims to explain the empirical ambiguity between foreign aid and economic growth in Pakistan. This study follows the Micro-Macro paradox and reviews critically the role that foreign aid has on economic growth. The study has utilized data from 1972 through 2023, while the ARDL co-integration approach approximates the estimation of the model. Most development projects in underdeveloped economies, particularly Kenya, focus on external resources. Hence, the trend that comes to light in this study. The analysis also unfolds the fact that high inflation holds back economic growth, underlined the potential of what rationally organized foreign economic aid may hold for boosting the economic growth of Pakistan significantly.