Impact of Project and Programme Aid on Economic Growth: A Cross Country Analysis

Pervez Janjua, Malik Muhammad and Muhammad Usman
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Pervez Janjua: Department of Economics, Preston University, Islamabad
Malik Muhammad: International Institute of Islamic Economics, International Islamic University, Islamabad.
Muhammad Usman: International Institute of Islamic Economics, International Islamic University, Islamabad.

The Pakistan Development Review, 2018, vol. 57, issue 2, 145-174

Abstract: This study examines the impact of foreign aid instruments, namely Project Aid and Programme Aid, on economic growth of 27 aid-receiving countries. The study constructs a system of three equations, i.e. growth, investment and human capital. Using the Generalised Method of Moment estimation technique, the study concludes that while Project Aid has a positive and significant impact on economic growth, Programme Aid has an insignificant impact on economic growth. Additionally, the study finds that economic policies do enhance effectiveness of aid at aggregate level. Therefore, the capacity of aid-recipient countries to effectively use their resources for economic development needs due consideration.

Keywords: Project Aid; Programme Aid; Economic Growth; Conditionality; Procurement Reform; System Equation Method; Generalised Method of Moment (GMM); Principal Component Analysis (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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