Developing countries face challenges of massive poverty, slow
GDP growth, high mortality rates from illnesses, and low levels
of education. The governments in these countries do not have
sufficient financial resources to fight these challenges
effectively. Foreign aid has played an instrumental role in the
implementation of development programs to combat poverty. The
purpose of this paper is to examine whether foreign aid has a
positive impact on development. Development in this paper is
measured using the human development index that incorporates a
knowledge index, health index, and standard of living index.
Social aid is used to capture foreign aid towards development
purposes. The hypothesis that foreign aid has a positive effect
on HDI is tested using ordinary least squares regression.
Regression results show that foreign aid has a negative
relationship with development. The findings of the study
indicate that foreign direct investment and domestic investment
play a significant role in a country's develop