Asymmetric Impact of Official Development Assistance on Agriculture Growth in Pakistan in The Presence of Governance: A Nonlinear ARDL Approach

10.2478/bjlp-2022-001097

Abstract

The study's objective is to examine the impact of official development assistance on
agriculture growth in Pakistan. The novelty of the research lies to look into asymmetric role
of official development assistance and by introducing governance indicators as interacting
variables with official development assistance to see the combined effect on agriculture
growth. The study used pre-Covid-19 data from 1985–2019 to analyze the pure effect of
ODA, as, during the COVID-19 pandemic, aid largely flows to the health sector of the
economy. The study applied a nonlinear ARDL technique to find the relationships among the
variables. The results indicate that official development assistance affects agriculture growth
asymmetrically. We also analyzed the moderating effects of corruption and political stability
on the agriculture-growth. We found that the interacting effect of corruption has a positive
impact on agricultural growth in the short and long term. Individually, corruption has a
significant negative impact on agriculture's growth. Political stability's interactive influence
has been statistically insignificant. Inflation and population are statistically unimportant,
although population growth has a considerable positive effect on the agriculture sector in
the short run. The study's findings include policy recommendations on official development
aid adjustments that significantly impact Pakistan's agriculture sector growth.