Do you think international aid received by Pakistan during the last five decades has been helpful for the economy or not? Why?
(b) What can Pakistan do if it wants to be self-reliant i.e. not depend on the aid?
Answers
Answer:
Foreign direct investment flows have increased dramatically in recent decades. As developing countries, remove restrictions and implement policies to attract FDI inflows, trade and investment have become increasingly intertwined. The analysis of the impact of foreign aid on economic development, suggests that poor countries have to relay on the foreign aid as a resource to fill the deficit. There are many forms of foreign resources like Foreign Direct Investment, Grants & Loans, Foreign Portfolio Investment, Export Credit, Official Aid, Technical Assistance, Emergency Relief, Project and non project aid. This paper reviews recent developments in FDI flows and its impact, and the importance of the policy context in which those flows occur. It analyses the trend and impact of foreign aid on the economic development of Pakistan during a three decade period, using different statistical techniques. From the analysis it is clear that the foreign capital flow has a positive impact on the GDP, thus a direct impact on the economic development of Pakistan.