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Erschienen in:
2020 | OriginalPaper | Buchkapitel
Investigating Aid Effectiveness in Developing Countries: The Case of Nepal
verfasst von : Yashoda Karki, Ilias O. Pappas
Erschienen in: Responsible Design, Implementation and Use of Information and Communication Technology
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Abstract
Foreign aid serves as an important source of capital for any developing or under-developed country. It is very important to see how the recipient country can utilize this aid in the economic upliftment of the nation. Taking a case of Nepalese economy, this paper investigates the effectiveness of foreign aid in developing countries. The result from Johansen’s cointegration test reveals that foreign aid independently is not adequate for the economic growth. Increased capital and technological infrastructures, improved skills on human capital, on the other hand, significantly changes the result for the positive aid impact on growth in the long run. Therefore, we can conclude that a good policy environment helps increase the aid effectiveness. However, the prevailing trade policy in the country is negatively affecting the aid effectiveness due to the extremely increased trade deficit. In the short-run, there is a negative impact of aid on growth.