Effectiveness of Human Capital, Trade Openness and FDI in Economic Growth: Evidence from Pakistan

Abstract

Pakistan's economy has fluctuated due to balance of payments crises, fiscal deficits, and governance issues (Siddique et al., 2016). Over the last decade, real GDP growth averaged 4.6%, underperforming South Asian counterparts and limiting social advancement. Addressing structural barriers is essential to sustain strong growth momentum focused on productivity and competitiveness. Given their theoretically validated and empirically proven potentials to expand sustainable output globally, assessing the comparative effectiveness of investments in human capital enrichment, international trade integration, and FDI technology/knowledge diffusion is relevant. Before strategic prioritisation for Pakistan's demands, localised evidence quantifying their growth contributions and binding restrictions should be examined. The 2030 Sustainable Development Agenda's 17 integrated economic, social, and ecological goals support this comprehensive multiplier channel evaluation. Human dignity is enhanced by quality education, reasonable career prospects, and industry/innovation activities supported by competent workforces and funding, particularly for low-income youngsters. Two-thirds of Pakistan's population is under 30, making skill-building and employment generation crucial (UNDP, 2022). Trade openness and investment inflows may spread beneficial externalities on environmental sustainability and community partnerships, other agenda pillars. The inconsistent empirical trade-growth linkages and varied FDI efficacy outcomes need detailed analysis before policy formulation (Siddique et al., 2016). With Pakistan pursuing fresh structural changes under its IMF contract to restore macro-fundamental stability, growth diagnostics finding optimum leverage across talent base enrichment, commerce development, and overseas capital access is vital. These are also interrelated ways to achieve 2030's multi-dimensional prosperity. Thus, evidence on human capital, commerce, and FDI in Pakistan may improve resource allocation to balance economic change with ethical, social, and climatic awareness.