Browsing by Author "KAOMA, Bwalya"

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    An Evaluation of the Impact of Foreign Aid on Economic Growth in Zambia
    (University of Lusaka, 2025) KAOMA, Bwalya
    In the context of developing countries, the role of foreign aid is truly vital. This is based on the notion whereby foreign assistance, if directed towards feasible and bankable economic areas, is likely to increase the GDP of the developing nations. This study aimed at determining the impact of foreign aid on the performance of Zambian economic activities. The study data sourced from the Zambia Statistics Agency, Ministry of Finance and National Planning and the World Bank 1990-2022. To determine the short and long run relationship between foreign aid and GDP, the research employed the Autoregressive Distributed Lag model because all variables were stationary of orders I(0) and I(1). The dependent variable GDP in Kwacha and the independent variables were foreign aid, FDI, Government expenditure, Exchange Rate and Trade. The study was premised on several economic theories and models that include among others, the Rostows theory of economic development and the development models of Harrod-Domar and Dependency theory to show the impact of the foreign aid and direct investment inflow on the economic development. The study found that in the short – run, FDI has a significant positive with no effect in the long run while foreign aid had no impact in the short run but had a significant positive impact on economic growth in the long run. Further, the study found that exchange had a positive significant effect on economic growth while coming out to be insignificant in the long run. On the other hand, Government expenditure and Trade came out to be insignificant both in the short run and the long run. The findings imply that the inflow of foreign aid and foreign direct investment is likely to have a huge positive impact on the economy of developing countries. But, for this to happen some policy initiatives have to be put in place first. These include among others, fighting corruption, keeping exchange rates stable to draw in investors, creating favourable conditions for businesses, embracing new technologies, and focusing investments on important economic areas for lasting growth. Keywords: GDP, Foreign Aid, Foreign Direct Investment, Government spending, Exchange Rate and Trade