Impact of Foreign Aid on Pakistan: A Study on Economic Perspective

Abstract

This paper investigates foreign aid in Pakistan. Poorer nations rely on external assistance to bridge the savings-investment and import-export deficits. Foreign resources take several forms, including FDI (Foreign Direct Investment), foreign credit and loans, technical assistance, project and non-project aid. However, UDCs, including Pakistan, do not have investment-friendly policies. They rely on foreign aid and debt instead of FDI and portfolio investments. The function of these external resources is always uncertain. The present study examines the structure and patterns of foreign aid in Pakistan, as well as its impact on economic development in Pakistan. The method is based on an analytical and descriptive Import-Export gap model derived from a survey of theoretical and empirical literature, which leads to reflective analysis. It is concluded that the function of external resources in Pakistan's economic development is always confused and ineffective