THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH OF PAKISTAN

Abstract

Purpose- The purpose of the study is to analyze the relationship between Foreign direct investment (FDI) and economic growth ( GDP) in Pakistan and to analyze the reason of declining FDI trends in Pakistan and also to find out why government putting efforts to get FDI inflow in Pakistan. Methodology/sample- the study involve the use of secondary data from World Bank and state bank of Pakistan from the year 1960-2010. To analyze the data Minitab 17 is used and regression, correlation, descriptive statistics were used. Scatter plot was also drawn to check the relationship between two variables. Findings- the analysis and comparative results clearly indicate that FDI play a key role to boost the economic growth of Pakistan. Besides economic growth It also put many positive externalities on the economy as compare to negative externalities. The reasons which describe the low FDI in Pakistan are lack of certain and one policy, corruption, lack of governance, energy crisis Practical Implications- the results of the research might help the readers to understand the importance of Foreign direct investment for economic growth and what steps should be taken to get inflow of FDI in Pakistan. The understanding of decline in FDI can be develop and by improving FDI, high economic growth could be achieve, so human development also improve by the growth of economic condition.