FOREIGN CAPITAL INFLOWS AND ECONOMIC GROWTH OF PAKISTAN

Abstract

Foreign capital inflows have significant relation with economic growth of Pakistan. The main capital inflows are FDI, Foreign debt and remittances by overseas Pakistanis. These three components are crucial solving financial issues of Pakistan. However, all three has different repercussions on economy. In order to find out relation between these three components we used quantitative method which substantiated our arguments statistically. We have found that FDI is the most beneficial component for the economy of Pakistan. Second is remittances by overseas Pakistanis. Although it doesn’t help in significant growth of economy; however, it helps Pakistan in resolving balance of payment crisis. Last component is foreign debt. It also has a significant relation with GDP; nevertheless, it is negative relation. Therefore, it would be appropriate to say that Pakistan needs to increase FDI as it is most beneficial foreign capital inflow. Hence, . Government can government needs to make the social milieu conducive for foreign investment by politically stabilizing the country. Moreover, government needs to eradicate of Information technology and vigilant system of increase FDI corruption by increasing the usage lability. Besides it, Government should overhaul its taxation system so that its dependence be reduced and it can truly become and independent country. Then accoun on foreign investment can Pakistan’s economic and social indicators will be improved and Pakistan will be prospered