The nexus between foreign direct investment and exports led-economic growth: Latest evidence from Pakistan using the autoregressive distributed lag (ARDL) approach

Abstract

Pakistan's economy has experienced a series of unfortunate events, such as the war on terror, political instability, and the COVID-19 pandemic, leading to an economic slowdown. This study aims to investigate the dependence of Pakistan's economic growth on foreign capital (FDI) or exports through FDI- and export-driven growth hypothesis. Annual time series data on GDP, FDI, Exports, and Imports were collected through the World Bank website from 1980 to 2022. An auto-regressive distributed lag (ARDL) approach is used to analyze the data that has been collected. The findings show that economic growth driven by FDI (FLG) is not valid in the long term but valid in the short term. In addition, exports have positively and significantly influenced economic growth in the long and short term and become a major source of economic growth in Pakistan.