Abstract
This research work examines the nexus between foreign aid and FDI inflows in selected South Asian economies (Pakistan, India, Bangladesh and Srilanka). The study employed econometric technique of random effect. A significant positive relationship between foreign aid and FDI inflows was observed for the period 2000-2013. Moreover, the study also confirmed the previous literature by establishing positive and significant relationship among GDP growth, law & order and FDI Inflows. The study concludes that foreign aid plays a crucial role in the determination of FDI inflows towards South Asian region. In this regard, the higher authorities need to build strong ties with the developed world.
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