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The Relationship between Financial Development and Foreign Direct Investmentand its Impact on Economic Growth ofPakistan

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  • Muhammad Sibt e Ali

    (PhD Scholar, School of Business, Zhengzhou University, Henan, China)

  • UsmanUllah Khan

    (Department of Economics, Hazara University Mansehra, Pakistan)

  • Dil Jan

    (Department of Economics, Islamia College Peshawar, Pakistan)

  • Sabiha Parveen

    (The Women University Multan, Pakistan)

Abstract

This research investigates the interaction between foreign direct investment (FDI) and financial development (FD) to promote economic growth in Pakistan for the period 1980 - 2017. Using Autoregressive distributed lag (ARDL) bound estimation techniques, the study showed that FDI, trade openness and government expenditures has a significant impact on economic development in Pakistan. More interestingly, it is evident that the interaction effect of FDI and FD has a significant positive impact on economic growth of Pakistan. This research can play an important role in policymaking to boost FDI and FD for the economic prosperity of Pakistan.

Suggested Citation

  • Muhammad Sibt e Ali & UsmanUllah Khan & Dil Jan & Sabiha Parveen, 2021. "The Relationship between Financial Development and Foreign Direct Investmentand its Impact on Economic Growth ofPakistan," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(1), pages 27-37, june.
    • Handle: RePEc:ani:irdjoe:v:3:y:2021:i:1:p:27-37
    DOI: 10.52131/joe.2021.0301.0023
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