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Capital inflows and economic growth in Pakistan

  • Raza, Syed Ali
  • Sabir, Muhammad Sarwar
  • Mehboob, Farhan

This study intends to investigate the impact of foreign capital inflow on economic growth of Pakistan during the period of 1985-2010. The empirical analysis is based on multiple regression technique. Results show that foreign direct investment (FDI), foreign portfolio investment (FPI) and remittances are positive and significant relationship with economic growth. While foreign aid shown significant but negative relationship with economic growth. Finding further suggests that foreign direct investment, foreign portfolio investment and remittances enhance the economic growth. And it is recommended that country like Pakistan should enhance the domestic resources to break the vicious circle of foreign aid.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36790.

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Date of creation: 04 Sep 2011
Date of revision:
Handle: RePEc:pra:mprapa:36790
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  1. Muhammad Zubair Khan, 1996. "Pakistan: Prospects for Private Capital Flows and Financial Sector Development," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 853-883.
  2. A.R. Kemal & Abdul Qayyum & Muhammad Nadim Hanif, 2007. "Financial Development and Economic Growth: Evidence from a Heterogeneous Panel of High Income Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 1-34, Jan-Jun.
  3. Tokunbo S. OSINUBI & Lloyd A. AMAGHIONYEODIWE, 2010. "Foreign Private Investment And Economic Growth In Nigeria," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
  4. Michael T. Gapen & Ralph Chami & Peter Montiel & Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 09/153, International Monetary Fund.
  5. Muhammad Arshad Khan & Shujaat Ali Khan, 2012. "Foreign Direct Investment and Economic Growth in Pakistan: A Sectoral Analysis," Working Papers id:4683, eSocialSciences.
  6. Kim, Soyoung & Yang, Doo Yong, 2008. "The Impact of Capital Inflows on Emerging East Asian Economies: Is Too Much Money Chasing Too Little Good?," Working Papers on Regional Economic Integration 15, Asian Development Bank.
  7. Muhammad Shahbaz & Khalil Ahmad & A. R. Chaudhary, 2008. "Economic Growth and Its Determinants in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 471-486.
  8. 0smail Çevi_ & Burak Çamurdan, 2007. "The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(3), pages 285-299.
  9. Muhammad Tariq Majeed & Eatzaz Ahmad, 2007. "FDI and Exports in Developing Countries: Theory and Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 735-750.
  10. Singh, A. & Weisse, B. A., 1998. "Emerging Stock Markets, Portfolio Capital Flows and Long-term Economic Growth: Micro and Macroeconomic Perspectives," Accounting and Finance Discussion Papers 98-af40, Faculty of Economics, University of Cambridge.
  11. KIMURA Hidemi & TODO Yasuyuki, 2007. "Is Foreign Aid a Vanguard of FDI? A Gravity-Equation Approach," Discussion papers 07007, Research Institute of Economy, Trade and Industry (RIETI).
  12. Adam, Anokye M. & Tweneboah, George, 2008. "Foreign Direct Investment and Stock market Development: Ghana’s Evidence," MPRA Paper 11985, University Library of Munich, Germany, revised 2008.
  13. Abdul Rashid & Fazal Husain, 2010. "Capital Inflows, Inflation and Exchange Rate Volatility: An Investigation for Linear and Nonlinear Causal Linkages," PIDE-Working Papers 2010:63, Pakistan Institute of Development Economics.
  14. Mohsin Hasnain Ahmad & Qazi Masood Ahmed, 2002. "Foreign Capital Inflows and Domestic Savings in Pakistan: Cointegration Techniques and Error Correction Modelling," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(4), pages 825-836.
  15. repec:lje:journl:v:1:y:2007:i:1:p:1-34 is not listed on IDEAS
  16. Jarita Duasa & Salina H. Kassim, 2009. "Foreign Portfolio Investment and Economic Growth in Malaysia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(2), pages 109-123.
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