Study On The Trade Effect Of India’s Aid To Five South Asian Countries

In the current international political economy,most countries have a close relationship with foreign aid,and they appear on the stage of foreign aid either as a donor country or as a recipient country.Foreign aid plays an important role in the economic development and policy making of a country and is widely valued by all countries.With the continuous development of foreign aid,many new donor countries have emerged in the field of foreign aid and are playing an increasingly important role in international aid,which makes the international aid system more diversified.India is one of the new donor countries.After independence,India has always been an aid recipient,relying on western industrialized countries and the former Soviet union.However,now India has gradually established its own aid program and actively established development aid relations with some developing countries.Since the mid-1980 s,India has been one of the world’s largest recipients of international aid,but successive Indian governments have resisted treating it as a net recipient of foreign aid.Between 1951 and 1992,India received $55 billion in foreign aid,making it the world’s largest recipient of aid.As the economy has grown,that identity has changed.Previously,scholars focused most of their attention on India’s status as a recipient country,but in recent years,its status as an aid provider has not received much attention.Therefore,this paper chose India for research,hoping to contribute to the research on foreign aid.Although India’s foreign aid recipient countries very much,but India has a very clear focus area,South Asia,India’s aid,which is to lay the India unchallenged in the region of their contribution to regional powers,this is also this article choose aid to South Asia,India as one of the reasons for the research content.Although the economic growth rate of India has been accelerating in recent years,there are still a lot of poor people in India,and it is also a new donor country.Therefore,this paper chooses India to study and observe whether it will promote the export of India to the recipient countries while providing foreign aid to help the recipient countries.This paper selects the data of India’s foreign aid from 2003 to 2018,and makes an empirical analysis by using the expanded trade gravity model to analyze the trade effect of India’s aid to five south Asian countries.By referring to the empirical analysis of the relationship between aid and trade by domestic and foreign scholars,this paper selects India’s aid to five south Asian countries,gross domestic product,population size and bilateral distance between India and five south Asian countries as independent variables,and India’s exports to five south Asian countries as dependent variables to build the model.The regression results of the model show that India’s aid to the five south Asian countries has a positive impact on India’s export to the five countries.For every additional unit of Indian assistance to the five south Asian countries,Indian exports to those five countries would increase by 0.07 units.Through empirical analysis,it is proved that when India provides foreign aid,it can also promote its own economy to some extent(export increase),that is,it will bring some economic benefits to itself.China and India are both developing countries,and India’s win-win results in providing foreign aid are worth learning from.Finally,on the basis of combing and analyzing the trade and aid between India and five south Asian countries,this paper summarizes the problems existing in India’s foreign aid.Since India and China are both emerging donor countries,the problems in India may be the common problems of most emerging donor countries,so this paper also puts forward some policy Suggestions on improving foreign aid.