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The Causal Links Between Foreign Direct Investment And Economic Growth In Pakistan

Author

Listed:
  • Najid Ahmad

    (Bahauddin Zakariya University, Multan)

  • Muhammad Hayat

    (Bahauddin Zakariya University, Multan)

  • Muhammad Luqman

    (Bahauddin Zakariya University, Multan)

  • Shafqat Ullah

    (Islamia University Bahawalpur)

Abstract

This paper investigates the relationship between foreign direct investment and economic growth in Pakistan. The co-integration and error correction model is used to show the relationship between foreign direct investment and gross domestic product in Pakistan. Gross domestic product is taken as dependent variable while foreign direct investment, labor force and domestic capital as independent variables. The results suggest that there is a positive relation between foreign direct investment and gross domestic product in short as well as long run. If we want to make economic progress then there is a need to invite foreign investors because foreign direct investment increases GDP that is economic growth.

Suggested Citation

  • Najid Ahmad & Muhammad Hayat & Muhammad Luqman & Shafqat Ullah, 2012. "The Causal Links Between Foreign Direct Investment And Economic Growth In Pakistan," European Journal of Business and Economics, Central Bohemia University, vol. 6(0), pages 20-211:6, September.
    • Handle: RePEc:aad:ejbejj:v:6:y:2012:i:0:p:20-21
    DOI: 10.12955/ejbe.v6i0.137
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    References listed on IDEAS

    as
    1. Zeshan Atique & Mohsin Hasnain Ahmad & Usman Azhar, 2004. "The Impact of FDI on Economic Growth under Foreign Trade Regimes: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 707-718.
    2. Abdul Khaliq & Ilan Noy, 2007. "Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Data in Indonesia," Working Papers 200726, University of Hawaii at Manoa, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ahmad, Arslan & Ahmad, Najid & Ali, Sharafat, 2013. "Exchange Rate and Economic Growth in Pakistan (1975-2011)," MPRA Paper 49395, University Library of Munich, Germany, revised Jul 2013.
    2. Saleem Khan & Muhammad Azam & Chandra Emirullah, 2016. "Import Demand Income Elasticity and Growth Rate in Pakistan," Foreign Trade Review, , vol. 51(3), pages 201-212, August.
    3. Eliphas Ndou & Nombulelo Gumata & Tebello Moletsane, 2024. "Exchange rate and GDP nexus in South Africa: the disconnect after the 2008 global recession," SN Business & Economics, Springer, vol. 4(2), pages 1-27, February.
    4. Ali, Sharafat, 2014. "Inflation, Income Inequality and Economic Growth in Pakistan: A Cointegration Analysis," MPRA Paper 53706, University Library of Munich, Germany.
    5. Ahmad, Najid & Ahmad, Arslan & Hayat, Muhammad Farhat, 2013. "Foreign Remittances and Economic Growth in Pakistan: An empirical investigation," MPRA Paper 49132, University Library of Munich, Germany.
    6. Ayesha Serfraz, 2018. "Analyzing Short-Run and Long-Run Causality between FDI Inflows, Labor Productivity and Education in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 5(1), pages 36-59.
    7. Mukesh Kumar & Nargis & Azeema Begam, 2020. "Export-Led Growth Hypothesis: Empirical Evidence from Selected South Asian Countries," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(1), pages 1-15, March.
    8. Taguchi, Hiroyuki & Batool, Bushra, 2024. "Emigrant’s remittances, Dutch Disease and capital accumulation in Pakistan," MPRA Paper 124941, University Library of Munich, Germany.
    9. Serfraz, Ayesha, 2017. "What is the effect of foreign direct investment inflows on economic growth in Pakistan? An empirical analysis in the light of religious sectarianism as catalyst for terrorism," ZÖSS-Discussion Papers 59, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).

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    More about this item

    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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