The Impact of Digital Transformation on Foreign Direct Investment: An Empirical Analysis of Pakistani Market

Abstract

This research is based on the impacts of foreign direct investment (FOI) on economic growth in Pakistan. It looks at how technology and digital tools change the way foreign investors make decisions. The main finding is that digital growth attracts more FOI. This shows when Pakistan improves its digital infrastructure, it becomes more attractive to foreign investors. Research also looked at the actual connection between foreign direct investment (FOI) and economic growth (EG) in Pakistan. It was demonstrated that the growth of the economy and other chosen macroeconomic variables (exchange openness, net financing, rising prices, national storage, and excess capital formation) have a long run cointegration relationship using a bound test to evaluate the degree of internal cooperation in the model equation. Exploring the Granger hypothesis of the link bet\veen FOI and GOP development in Pakistan was the primary objective of this research. In addition, we looked at the number of correlations between the model's variables and the short- and long-term effects of FOI on GOP growth. The collected data suggests that Pakistan should change its policies to entice FO I (foreign direct investment). When other countries invest directly in developing nations, such economies are able to expand. Foreign direct investment (FOI) does more than only aid with tech transfers; it also helps with human capital development, increases regional power in the input market, and helps with human capital growth.