Abstract

Foreign aid is commonly defined as the voluntary transfer of resources from one country to another. While such assistance can yield both benefits and drawbacks, its impact on economic growth remains a subject of intense debate. Disentangling the effects of aid is methodologically challenging, particularly in economies where aid is deeply integrated, and opportunities for controlled experimentation are limited. Prominent economists such as Jeffrey Sachs argue that aid serves as a critical driver of growth and development. In contrast, critics like Dambisa Moyo contend that aid has paradoxically perpetuated poverty and impeded growth by fostering corruption, dependency, export constraints, and even susceptibility to health pandemics. This paper examines Bangladesh and the Pacific region as a case study, analyzing both the positive and negative effects of foreign aid on the countries’ economic growth and development trajectory.