Impact of Agricultural Aid on Agricultural Growth in Nepal

Abstract

Nepal has been receiving agricultural sector foreign aid since 1950/51. Agricultural output growth has remained relatively low despite continuous aid inflows in agricultural inputs. This study examines the trend of foreign aid in agriculture and its impact to agricultural growth in Nepal. The study used a quantitative research design using annual data from 1975 to 2020. Simple linear regression was used to examine the impact of agricultural sector foreign aid on agricultural GDP. Besides, the study used irrigated land, imported chemical fertilizers, agricultural sector credit, government expenditure in agriculture, and the economically active population engaged in agriculture as independent variables. The findings revealed that foreign aid, irrigated land, imported chemical fertilizers, government expenditure in agriculture, and the economically active population and agricultural sector credit had positive and statistically significant effect on agricultural GDP. The results show that both external financial assistance and complementary agricultural inputs play important roles in promoting agricultural production in Nepal. The study concludes that maintaining and expanding agricultural inputs by utilizing foreign aid is essential for achieving higher agricultural growth.