Foreign inflows and economic growth: An emiprical study of the SAARC region |
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Authors: | Muhammad Tahir Mario Arturo Ruiz Estrada Muhammad Asim Afridi |
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Institution: | 1. Department of Management Sciences, COMSATS Institute of Information Technology, Abbottabad, Pakistan;2. Social Security Research Centre (SSRC), Centre for Poverty and Development Studies (CPDS), Faculty of Economics and Administration (FEA), University of Malaya, Malaysia |
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Abstract: | The study examines and highlights the impact of selected foreign inflows (aid, trade, FDI, debt and remittances) on the economic growth of the South Asian Association for Regional Cooperation (SAARC) countries. The existent literature lacks a comprehensive analysis of the SAARC countries as countries like Afghanistan, Bhutan and the Maldives have largely been ignored due to the shorter time periods of available data. The study is empirical in nature and utilizes panel data techniques on macroeconomic data for the period 2008–2015. Foreign aid and foreign direct investment are found to impact economic growth positively. Foreign debt and trade flows are found to adversely affect economic growth. No relationship is established between the flow of remittances and the economic growth of these countries. The obtained results are robust to different proxy variables and the addition of macroeconomic variables. For the first time, the study provides policy implications based on the data of all SAARC countries. The study recommends focusing on increasing the inflows of resources in the form of aid and foreign direct investment (FDI) from the developed world to achieve higher economic growth. |
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Keywords: | Corresponding author External flows Debt Aid Trade FDI Remittances SAARC |
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