Utilization of Foreign Aid on Agriculture Sector in Nepal: A Trend Analysis

Abstract

This paper examines the role of foreign aid in Nepal's agricultural sector and its association with agricultural development. Given Nepal's limited domestic resource mobilization, low savings, and investment constraints, foreign aid has remained an important source of financing for agricultural development. The study is based on secondary data collected from official government publications and employs descriptive statistics, trend analysis, and Pearson correlation to examine the relationship between foreign aid and agriculture's contribution to Gross Domestic Product (GDP). The findings reveal that foreign aid allocated to the agricultural sector has generally increased over time, although with considerable annual fluctuations. In contrast, agriculture's contribution to GDP has gradually declined throughout the study period. The descriptive and correlational analyses indicate that increased foreign aid was not associated with a proportional increase in agriculture's contribution to GDP. The study concludes that improving agricultural performance requires not only external financial assistance but also complementary investments in governance, irrigation, technology, market access, and institutional capacity.