Foreign Aid Promotes Human Development in Bangladesh: Empirical Evidence from Governmental and Nongovernmental Aid
Keywords:Foreign Aid, ODA, NGO Aid, Human Development, Multivariable Multiple Regression
Foreign aid is the international flow of money, commodity and services from governments in advanced countries and international institutions to developing ones for the benefit of the receiving country. Bangladesh is a developing country receiving a billion dollars of foreign aid in the last few decades. This paper taking the data from 1990-2021, empirically tests the effectiveness of foreign aid in the promotion of human development in Bangladesh. Using multivariable multiple regressions, this paper finds that foreign aid positively impacts HDI and its sub-indices of income, education and health. Moreover, this paper finds that foreign aid coming through the nongovernmental channel is more effective than foreign aid coming through the governmental channel though the volume of funds received by the NGOs is just one-tenth of total foreign aid. Our findings suggest that foreign donors should consider allocating more funds through nongovernmental channels in order to speed up the human development and political stability of the country.
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