Despite receiving large quantities of aid, many developing
countries, especially the Least Developed Countries, have remained
stagnant and became more aid dependent. This grim reality provokes
vigorous debate on the effectiveness of aid. This study analyzes
the effectiveness of aid on education and health sector of Pakistan
over the period 1973-2008. This study focuses on the health and
education sectors in the light of two Millennium Development Goals;
achieving universal primary education and reducing child mortality.
We estimate two separate econometric models. One to test the short
run and long run relationship between foreign aid and gross primary
enrollment in the education sector and the other model test the
short and long run relationship between foreign aid and infant
mortality rate in the health sector. Our results proved the short
run as well as long run relationship between foreign aid and
primary school enrollment in the education sector and also proved
the short run and long run relationship between foreign aid and
infant mortality rate in the health sector.
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