Foreign Aid in Bangladesh: Its Contributions to Economic Growth and Development

Author: Md Raihan Kabir

Kabir, Md Raihan, 2018 Foreign Aid in Bangladesh: Its Contributions to Economic Growth and Development, Flinders University, College of Humanities, Arts and Social Sciences

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The literature on the aid-growth relationship is rife with debate. Most of the studies on aid effectiveness are based on cross-country panel analyses that create confusion in respect to understanding the real impact of aid utilization from an individual country context. Bangladesh, a developing country of South Asia, is considerably dependent on foreign aid to close the gaps in development financing. Aid effectiveness is crucial for the prosperity of Bangladesh but it is difficult to draw a firm conclusion on the impact of aid utilization in Bangladesh from the limited number of studies conducted thus far. This study assesses the actual contribution of aid to economic growth and development in Bangladesh. This thesis takes a more qualitative approach than the earlier studies on Bangladesh, drawing on the subjective findings of the donors, Government of Bangladesh, research organizations and scholars. It analyses the contribution of aid in terms of public investment to the economic, social, institution building and environmental sectors. I argue that the contributions of foreign aid to socioeconomic development, institutional capacity development and environmental management are significantly positive in Bangladesh. Nonetheless, due to the impediments to aid effectiveness and systematic deficiencies, Bangladesh has failed to maximise the benefits of aid utilization. This thesis discusses the aid effectiveness frameworks in Bangladesh along with the impediments operating against aid utilization in an effort to identify pathways that will ensure the maximum outcomes of aid utilisation. This study finds a conditional positive impact of foreign aid on growth and development in Bangladesh.

Keywords: Foreign aid, public investment, economic growth, social development, institutional competence, aid effectiveness

Subject: International Studies thesis

Thesis type: Masters
Completed: 2018
School: College of Humanities, Arts and Social Sciences
Supervisor: Associate Professor Michael Barr