Effectiveness of Foreign Aid and Tax Revenue on Economic Growth of Pakistan

Authors

  • Nasreen Akhtar Lecturer of Economics, Department of Economics, The University of Layyah
  • Sadia Anjum Assistant Professor of Economics, Department of Economics, the University of Layyah, Pakistan
  • Ghulam Abbas Lecturer of Business Administration, Department of Business Administration, The University of Layyah, Pakistan
  • Muhammad Asif Idrees Lecturer of Economics, Department of Economics, The University of Layyah, Pakistan

DOI:

https://doi.org/10.21015/vtess.v11i2.1476

Abstract

Economic growth is defined as the increase in the production of economic goods and services over time. This paper examines the impact of foreign aid and tax revenue on economic growth in Pakistan. Additionally, it explores how we can enhance the economic growth rate through improvements in the taxation system and by reducing dependence on foreign aid. Both domestic revenue and foreign aid serve as sources of development financing, and both tax revenue and foreign aid have an impact on economic growth. The empirical analysis is based on secondary data, specifically time series data from the period 1975-2018. The Johnson co-integration estimation . Study employs the ARDL (Auto Regressive Distributed Lag) Bound testing approach to explore the relationship between economic growth and other dependent variables, including tax revenue, capital formation, government expenditure, per capita income, and foreign aid. The results of the ARDL model indicate that foreign aid has a positive impact on economic growth in Pakistan. Government expenditure and per capita income also have a positive influence on economic growth, while taxes and capital formation negatively affect economic growth in Pakistan.

Author Biography

Nasreen Akhtar, Lecturer of Economics, Department of Economics, The University of Layyah

Department of English, Bahadur sub campus layyah,BZU,Multan

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Published

2023-06-30

How to Cite

Akhtar, N., Anjum, S., Abbas, G., & Idrees, M. A. (2023). Effectiveness of Foreign Aid and Tax Revenue on Economic Growth of Pakistan. VFAST Transactions on Education and Social Sciences, 11(2), 120–130. https://doi.org/10.21015/vtess.v11i2.1476

Issue

Vol. 11 No. 2 (2023): April-June

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Articles

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