摘要：The present study analyzes the relationship between foreign aid andeconomic growth taking into account the process of fiscal decentralization inPakistan. The main objective of the present study is to observe the role offoreign aid in increasing economic growth considering federal structure ofPakistan. The study uses time series data for the period 1980-2014 andemploys 3SLS econometric technique for estimating the model. The results ofthe study indicate that foreign aid and fiscal decentralization have positiveimpact on economic growth of Pakistan. Furthermore economic growth andfiscal decentralization both exert positive impact on foreign aid. The results ofthe study show that economic growth has negative relation with fiscaldecentralization and foreign aid has positive effect on fiscal decentralization.The study finds bidirectional causality between: economic growth and foreignaid, economic growth and fiscal decentralization and between foreign aid andfiscal decentralization.
