Resumen de Testing the aid-growth nexus for South Asia, 1971-2005

Muhammad Idrees, Andaleeb Kaosar

• This article tests the relationship between the foreign aid and economic growth using the data from 1971 to 2005 for the region of South Asia. We find that foreign aid is highly effective towards working of the economy of the region. The Least Squares Dummy Variables (LSDV) model with fixed effects is employed to establish the existence of relationship between foreign aid and economic growth. Furthermore, this research draws some policy implication for the further development of the region keeping the effectiveness of foreign aid in mind.