Pakist A Developing Country

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Introduction: Pakistan is a developing country which is deficient in capital. Since its inception it has relied on foreign assistance to fill the financing gap which exists in different sectors. An efficient allocation of funds in each sector would have helped us overcome these difficulties and helped us raise the standard of living across the board. Due to mismanagement on the part of the government, there were wasteful expenditures. Now the country faces fiscal deficits due to corrupt government officials and poorly constructed policies. As a result of all this the country has amassed huge amount of foreign debt from donor countries (Hassan, 1998). Pakistan used to receive ad till 1977, after which assistance came in the form of loans and grants. Since productivity was very low in our country, saving were low which our debt servicing capacity i.e. our ability to pay back the the loaned amount. Mohey-uddin (2005) says that aid has made the country irresponsible when it comes to spending. Proponents of aid believe that it is because aid that the country has been able to maintain a high growth rate despite low savings (Qureshi 1968). On the other hand opponents believe that aid has no significant impact on either growth or development (Boone 1996). It is believed that aid is one of the tools through which developing countries can fill the financing gap and move towards capital accumulation but research shows that aid induces governments to direct more funds towards

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