Vestnik MGIMO-Universiteta (May 2019)
Foreign Aid as a Factor of Development of Economy of the Developing State: The Experience of Pakistan
Abstract
The aim of this study is to analyze the use of foreign aid for stimulating economic development using the case of Pakistan and to find out advantages and disadvantages of raising national financial resources through foreign aid. The article analyzes the evolution of the policy of attracting financial resources through this channel, as well as the main Pakistani donors and their conditions.The author uses the most representative theories which consider the consequences of attracting foreign assistance to the national economy making the theoretical basis of the study a synthesis of the concept of aid as the most important factor to stimulate development and M.A. Rahman’s approach to determining an impact of foreign aid inflows on economic growth. The article emphasizes that foreign aid has always been very significant in stimulating the development of the Pakistani economy due to the serious limitation of the volume of national capital since its independence. The author considers the effectiveness of assistance provided to Pakistan during the import substitution period of its economic policy. The construction of large objects of heavy industries and infrastructure in various regions of the country was financed from external resources.The article also analyzes the current volume, conditions and forms of foreign assistance provided to Pakistan. The author considers the main donors of the Pakistani economy in the 1990s and 2010s and reveals the tendency of shifting the terms of aid’s allocation from grants to concessional loans, which inevitably leads to an increase in the volume of the country's external debt.
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