Abstract
Countries with high economic growth rates afford enviable quality of life to
its citizens. On the other hand, countries that do not make economic progress
are found stuck in poverty, crime and social backwardness. Foreign Direct
Investment (FDI) occupies a significant importance in the socio-economic
development of any economy. High inflow of Foreign Direct Investment
(FDI) leads to the reduction in poverty, unemployment and to high economic
growth in developing countries like Pakistan. However, domestic economic
progress and stability leave significant impact (i.e. both positive and
negative) on the inflow of FDI in home country. In this connection, the major
objective of this research paper is to find out the extent to which economic
scenario in Pakistan has become successful in attracting FDI. Therefore, this
research paper has been focused on finding out the impact of GDP growth
rate and rate of inflation on the inflow of Foreign Direct Investment (FDI)
in Pakistan. For estimation, ABDL approach was applied on time series
secondary data (i.e. from 1970 to 2015). The empirical evidence confirms that
there is significant impact of selected independent variables (i.e. Gross
Domestic Product growth rate and Rate of Inflation) on the inflow of FDI in
Pakistan during mentioned time period. On the basis of study results it is
suggested that government of Pakistan needs to make its monetary policy
more effective to ensure stable and increasing economic growth in the
country.
Dr. Erum Khushnood Zahid Shaikh, Dr. Najma Shaikh, Dr. Albeena Mirza. (2017) IMPACT OF GDP GROWTH RATE AND INFLATION ON THE INFLOW OF FOREIGN DIRECT INVESTMENT (FDI) IN PAKISTAN, Asia Pacific, Vol-35, Issue 1.
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