Inclusive growth is a type of economic growth which is sustained over decades and provides benefits to the entire society. The main objective of the paper is to examine the relationship between economic and inclusive growth. For this purpose, inclusive growth index is constructed by four variables inequality, poverty, employment rate, and enrolment rate. To explore the relationship between economic growth with inclusive growth in Pakistan, time series data from 1971 to 2014 is used. Stationarity of the data is checked through augmented Dickey-Fuller test and on the basis of the different order of integration. Autoregressive distributed lag model is employed. The results of the study show that the growth in Pakistan is not fully inclusive. There is a half-portion of the growth share in the society. Other control variables such as investment have a positive impact, whereas inflation has a negative impact on inclusive growth.

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Foreign Aid (FA) is an important determinant of economic growth in the developing world and especially countries like Pakistan, where development needs could not be financed by the government due to limited domestic resources. FA supplements domestic resources of finance such as savings and also enhances the amount of investment and capital stock in the country. Education is also a one of the major contributors of economic growth. In countries like Pakistan education also plays a vital role in political stability where institutions are not sound enough. The Major objective of the study is to check the effectiveness of foreign aid for education in Pakistan. This study has been primarily conducted using a time series data set for Pakistan over the period 1975 to 2010. The variables of interest are foreign aid and education, other variables are investment and openness to foreign trade. For empirical analysis ARDL techniques of co-integration developed by Pesaran and Shin (Ghorbani & Motallebi, 2009) have been used. The results show positive relationship between foreign aid and education. The study has relevance as far as policy decisions are concerned for foreign aid.