Date of Award

12-2016

Culminating Project Type

Thesis

Degree Name

Applied Economics: M.S.

Department

Economics

College

School of Public Affairs

First Advisor

Artatrana Ratha

Second Advisor

Masoud Moghaddam

Third Advisor

Chukwunyere Ugochukwu

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Keywords and Subject Headings

development, foreign aid, foreign direct investment, remittance, economics, South Asia

Abstract

The total amount of money sent from the developed world to the developing world has always been increasing with no signs to slowing down. Foreign aid and remittance are at its highest levels ever recorded. Even with these large sums of money transfer, there still seem to be no consensus among economists regarding the effectiveness of external development finance and foreign exchange earnings (Foreign Direct Investment, foreign aid or remittance) in promoting economic growth. This paper attempts to identify an econometric model that properly portrays this relationship and analyze the effect of external development finance and foreign exchange earnings on economic growth in South Asia. A Fixed Effect panel model is developed using data of Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka ranging from 1960 to 2014. These findings suggest that only remittance have a consistent positive effect on growth, where as Foreign Direct Investment and foreign aid have varying effect dependent upon model specification.

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