Role of Foreign Aid in Employment Generation; A Case Study of Pakistan

Abstract

Foreign aid is very important for the development process of a country. The main aim objective of this study was to empirically investigate the relationship between foreign aid and employment generation in Pakistan. Secondary data was collected from 1980-2015 for time series data analysis. World Development Indicators and the Pakistan Economic Survey were the main sources of data (World Bank, 2020). ARDL model used for the data analysis. Employment level was used as a dependent variable, and foreign aid, Economic Growth (GDP), Gross Fix Capital Formation (GFCF), government expenditure, participation rate, and exports were used as independent variables. Form the results of the study, and it was clear that foreign aid and employment level have a positive and significant association in Pakistan. The study concludes that foreign aid has positively contributed to employment generation.