Foreign Direct Investment In Pakistan

Abstract:

Purpose- This research paper aims to analyze the impact of foreign direct investment (FDI) and export on economic growth of Pakistan for the period 1987 to 2015. It evaluated the GDP growth performance and assessed the historical trends of the FDI and Exports in Pakistan.

Methodology/Sample- We used the yearly time series data to analyze the relationship between gross domestic product (GDP,) foreign direct investment and Exports. In this model GDP is used as dependent variable whereas FDI and Exports are measured as independent variables.

Findings- According to the results, the model is overall significant with the positive and significant association of GDP with FDI and Exports.

Practical Implications-On the basis of the empirical

Both the above things conceivably the significant reasons for

substantial volume of Exports, things sold out to remote purchasers to produce incomes from outside the nation.

Currently, Pakistan is facing number of problems, which has directly weakened its economic stability and growth rate. This is mainly because of the political instability, high rate of bombers attacks, lack of political leader’s interest, and lastly low production due to expense load shedding which is directly impacting the exports of Pakistan. The main problem is that due to low export rate which has directly affected the economic growth of Pakistan. Similarly, the low production has also resulted in the high import rates for which the consumers of Pakistan have to purchase products at high rate.

FDI is basically in flow of funds in the economy of a country of capital nature which enables the country to attain economic growth and prosperity which it misses because of lack of funds and poor interest of local

The role of the foreign direct investment (FDI) has been generally recognized as a growth enhancing factor in the developing countries (Khan, 2007).

Most developing countries like Pakistan consider FDI as the major source of capital funding. If we talk about today’s world it’s very important for a country like Pakistan to attract foreign direct investment with respect to ongoing projects like CPEC in Gawadar can surely attract a good amount of foreign direct investment which may help in boosting the economic development.

FDI alleviate economic growth in the developing countries, this has greater attention and significant for the economists and policy makers, due to following reasons: First, FDI provides an ease to developing countries to access and learn new technology, make management and labor skilled and effective.

Second, through FDI, host countries increase the surplus of capital account and help to improve or rectify the trade balances. Thirdly, as developing host countries have lower rates of capital accumulation and thus FDI provides an opportunity to support domestic investment to increase economic