Abstract
This article looks at the impact of foreign aid (foreign loans and grants) on economic growth in developing countries like Bangladesh. Using a time series analysis to perform an empirical inquiry for Bangladesh between 1995 and 2016. Several time series techniques are used in this work, including the Johansen–Juseliues test and the Granger causality test. In the short run, foreign loans have a greater impact on economic growth (per capita GDP), whereas foreign grants have no effect. There is also a one-way correlation between foreign loans and domestic investment. In the coming days, we recommend that the Bangladesh government be cautious and smart in preserving bilateral and multilateral aid relationships with donor organizations and countries.
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