Which Factors Influence the Economic Growth of the Country? Evidence with Reference to Pakistan

Abstract

Economic growth of the country is influenced by different factors. These factors vary from country to country. Some of the factors which fluctuate the economic growth of the country are common in all the countries either these are developed countries or underdeveloped countries as well. Different researches have already been conducted by different researchers in different countries and they used different variables which have impact on economic growth of the country as well. This study used five independent variables named as Inflation Rate, FDI, Literacy Rate, exchange rate and interest which become the reason of bringing change in economic growth of the country. Gross Domestic Product has been used as proxy for economic growth of the country as dependent variable in this study. This study mostly results match with previous studies as well. This study used for tests for results such as collinearity for reliability, correlation, regression and descriptive statistics as well to check the relationship between these dependent variable and independent variables. This study found that three variables named as inflation rate, FDI and interest rate has significant positive relationship with GDP except one inflation rate which has significant negative relationship with GDP. While other two variables named as exchange rate and literacy rate has insignificant positive relationship with GDP as well.

Keywords: GDP, FDI, Pakistan, Collinearity, Regression, Correlation, Pakistan