Bangladesh is an emerging third world country. The country has
potential to develop a great amount in the future; however, high
poverty, low rates of literacy and a rapidly increasing population can
hinder its development. The fertility rate of Bangladesh had dropped
significantly in the early 1990s but it has plateaued ever since
entering the third millennium. This might be of great concern to an
evolving economy like Bangladesh. A great worth of foreign aid is
flowing into the country every year to support its future development.
Thus, it is crucial to analyze the effects of foreign aid on the fertility
rate of Bangladesh. This paper looks critically at the relationship
between foreign aid and fertility rate in Bangladesh over a span of 35
years. Augmented Dickey Fuller (ADF) test has been used to check
for unit roots followed by co-integration tests. Finally, the Granger
causality test has been performed to look for the direction of
relationship. These tests have showed that a bi-directional causal
relationship runs between the two variables.
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