Foreign Aid and Social Sector of Pakistan

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.