This study contributes to the aid-development literature by examining the role of host country factors in conditioning the investment effect of foreign aid, covering a panel of six South Asian countries over the period 1990–2019. The study uses second-generation panel unit root, cointegration, and causality methods to control for endogeneity, cross-section dependency, and structural breaks. The study further applies the panel autoregressive distributed lag (ARDL) method of Pooled Mean Group (PMG) and the Common Correlated Effect Pooled Mean Group (CCEPMG) to estimate the long and short-run effects. The study results suggest that in the long run, foreign aid reduces or crowds out domestic investment directly but promotes domestic investment from the complementarity between aid and trade, human and financial development, and FDI. The causality result provides evidence of bi-directional causality between the two, supporting the crowding-out effect.

本研究通过考察东道国因素在调节外国援助投资效果中的作用，为援助发展文献做出了贡献，涵盖了 1990 年至 2019 年期间六个南亚国家。该研究使用第二代面板单位根、协整和因果关系方法来控制内生性、横截面依赖性和结构断裂。该研究进一步应用合并平均组（PMG）的面板自回归分布滞后（ARDL）方法和共同相关效应合并平均组（CCEPMG）来估计长期和短期效应。研究结果表明，从长远来看，外援直接减少或挤出国内投资，但通过援助与贸易、人力和金融发展以及FDI之间的互补性促进了国内投资。因果关系结果提供了两者之间双向因果关系的证据，支持了挤出效应。