IMPACT OF FDI ON ECONOMIC ESCALATION: EMPIRICAL INVESTIGATION /EVIDENCE FROM PAKISTAN

Abstract

In ourpaper, we investigate the influence ofExternal Directfunds, Remittances, External Debt andDomestic Capital on Economic Escalation ofPakistan by using time series analysis over the period 1976-2015. Ordinary Least squares (OLS), Stability analysis, Co-integration tests, Stationary analysis by using unitroot test, ECMand Granger Causality test are used to examine the relation and impact between dependent and independent variables. Whereas Foreign Direct Investment, Domestic Capital, External Debt, and Remittances used as predictors and “Gross Domestic Product” used as predictant. The results indicate that FDI and External Debt have significant andpositive impact on Economic Escalation ofPakistan while Domestic Capital have substantial but negative impact on Monetary escalation ofPakistan due to not utilizing domestic resources at theirfull capacity and remittances have insignificant effect on economic uplifting because people spend those remittances on buying imported items. Government ofPakistan must have to take incentives, they should invest in varioussectors like infrastructure, tourism andother in command ofattracting the local and external investors to increase FDIinflows.