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Effectiveness of foreign aid in the light of millennium development goal on the health sector: a case study of Pakistan

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  • Anwar, Mumtaz
  • Rashid, Muhammad Khalid

Abstract

Most of the developing countries are becoming more aid dependent with the passage of time. This bleak reality provokes debate on aid effectiveness. This paper analyzes the effectiveness of aid on the health sector of Pakistan over the period 1973-2008. The study focuses on the health sector in the light of Millennium Development Goal; reducing child mortality. We estimate an econometric model to test the short and long run relationship between foreign aid and infant mortality rate in the health sector. In this context, different tests i.e. Augumented Dickey Fuller test, Johansen Likelihood Ratio test and Vector Error Correction Method are used. The results indicate that there is short run and long run relationship between foreign aid and infant mortality rate. The results show that one percent increase in foreign aid will decrease the infant mortality rate by 0.4 percent. This study suggests that an increase aid in this sector will result in better health conditions.

Suggested Citation

  • Anwar, Mumtaz & Rashid, Muhammad Khalid, 2011. "Effectiveness of foreign aid in the light of millennium development goal on the health sector: a case study of Pakistan," MPRA Paper 37142, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37142
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    References listed on IDEAS

    as
    1. Thiele, Rainer & Nunnenkamp, Peter & Dreher, Axel, 2006. "Sectoral aid priorities: Are donors really doing their best to achieve the millennium development goals?," Kiel Working Papers 1266, Kiel Institute for the World Economy (IfW Kiel).
    2. World Bank, 2009. "World Development Indicators 2009," World Bank Publications - Books, The World Bank Group, number 4367.
    3. Marijn Verhoeven & Mr. Sanjeev Gupta & Mr. Erwin H Tiongson, 1999. "Does Higher Government Spending Buy Better Results in Education and Health Care?," IMF Working Papers 1999/021, International Monetary Fund.
    4. Susanna Wolf, 2007. "Does Aid Improve Public Service Delivery?," WIDER Working Paper Series RP2007-71, World Institute for Development Economic Research (UNU-WIDER).
    5. Filmer, Deon & Pritchett, Lant, 1997. "Child mortality and public spending on health : how much does money matter?," Policy Research Working Paper Series 1864, The World Bank.
    6. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    7. Susanna Wolf, 2007. "Does Aid Improve Public Service Delivery?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 650-672, December.
    8. Mr. Emanuele Baldacci & Mr. Larry Q Cui & Mr. Benedict J. Clements & Mr. Sanjeev Gupta, 2004. "Social Spending, Human Capital, and Growth in Developing Countries: Implications for Achieving the MDGs," IMF Working Papers 2004/217, International Monetary Fund.
    9. repec:zbw:ifwkie:3881 is not listed on IDEAS
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    More about this item

    Keywords

    Infant Mortality rate; Millennium Development Goal; Foreign Aid;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • I10 - Health, Education, and Welfare - - Health - - - General

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