Measuring the Impact of Foreign Direct Investment on Economic Growth of Pakistan

Abstract

Over the last three decades, FDI has strengthened its position as a set of advantages at the global level. Economic growth is a common desired outcome for the nations that get its advantages. Such outcomes do not manifest in the same form in all recipient economies and hence allow the opportunity to examine this relationship at nation level. This research sets out to do just that by using empirical methods to look at how FDI has affected Pakistan's economy. Time series data from the years 1971 to 2020 were utilised for this purpose. For data analysis, the bound testing technique to co integration inside the context of the Autoregressive Distributed Lag (ARDL) was applied. The outcomes of the research confirmed the concept of favourable influence of FDI on economic growth of Pakistan. Also supported by the data was the idea that FDI is more productive than domestic investment.