Trend Composition and Impact of US Aid on Economic Growth of Nepal
Date
2022-04
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Economics,T.U. Birendra Multiple Campus
Abstract
Background: Foreign aid is the donations of money, goods, or services from one nation to
another. Such donations can be made for a humanitarian, altruistic purpose, or to advance
the national interests of the giving nation. Aid can be bilateral or multilateral. Bilateral aid
is usually in the form of conditional aid in which the recipients get support from the donor
country. This study “Trend Composition and Impact of US Aid on Economic Growth
of Nepal” tries to analyze the trend and impact of Us aid in Nepal.
Materials and Methods: This study is cross-sectional and analytical and is completely
based on secondary data from FY1990/91 to FY2020/21. To examine the trend and
impact of foreign aid on the economic growth rate of Nepal simple regression model
were used. The coefficient of determination R
2
and test of significance were
calculated. For the level of significance of 5 percent, the p-value for the US aid was
obtained to be less than the level of significance which suggested that there existed a
significant relationship between US aid and the GDP of Nepal.
Result: Over the 30 years, the total assistance amounted to US$ 850.28 million
corresponding to 48.27 percent of the total US aid. Grants amounted to US $ 871.46
million corresponding to 49.74 percent of the total US assistance. Loans totaled US $
30.44 million which is equivalent to 1.99 percent of the US aid. US aid has helped
Nepal in various fields including agriculture, health, sanitation & family planning,
natural disasters, education, energy, economic growth, trade, and other. The R
2
value
for the US aid and the GDP of Nepal was found to be 79.76 percent which signified
that US aid could be one of the factors whose change might contribute to a change in
the GDP of Nepal.
Conclusions: In developing countries like Nepal, adequate mobilization of internal
resources could not have been possible without foreign aid to accelerate economic
growth and development. The function of foreign aid is to enable the developing
countries to make a transition from economic stagnation to self-sustaining economic
growth. Among the various projects under foreign aid, few of them are successful to
fulfill their indicated aim but in general, they have been less effective in bringing the
required amount of economic growth.
Keywords: GDP, Economic growth, Regression, Trend, US Aid,
Description
“Trend Composition and Impact of US Aid on Economic Growth
of Nepal”
Keywords
Economics Growth on Nepal