Abstract:
Foreign Direct Investment (FDI) in Pakistan is one of the major external sources of
funding to meet obligations of resources gap and goal achievement. FDI has played a
vital role in the economic growth of Pakistan.
Foreign direct investment (FDI) is often seen as an important catalyst for economic
growth in the developing countries. It affects the economic growth by stimulating
domestic investment, increasing human capital formation and by facilitating the
technology transfer in the host countries. The main purpose of the study is to investigate
the impact of FDI on economic growth in Pakistan, for the period 1980-2012. The
relationship between FDI and economic growth is analyzed by using the production
function based on the endogenous growth theory; other variables that affect economic
growth such as trade, domestic capital and, labor is also used. The results of the study
show a negative and statistically insignificant relation between the GDP and FDI Inflows
in Pakistan. Policy recommendations are suggested in the light of the results obtained,
regarding the FDI in Pakistan.
