Impact of Capital Inflow on Economic Growth of South Asian Economies

Abstract

The main objective of this research is to explore the impact of capital inflow on economic growth of South Asian economies (Bangladesh, India, Pakistan and Sri Lanka). The gross domestic saving, commercial bank & other lending and portfolio equity investment are the independent variables and the gross domestic product growth is the dependent variable.  This study is consisting on panel-based data and the data was taken for the period of 1981 to 2016, which are 36 years. The data was collected from World Development Indicators (WDI) and Quandl on annual basis. Panel ARDL (PMG) model is applied to analyze the data. The results related to gross domestic saving shows that there is positive and significant long - run relationship present in between gross domestic saving and gross domestic product growth on the other hand the results related to short - run shows that there is negative and non-significant relationship present in between gross domestic saving and gross domestic product growth. The results related to portfolio equity investment shows that there is positive and significant long - run relationship present in between portfolio equity investment and gross domestic product growth on the other hand the results related to short - run shows that there is positive but non-significant relationship present in between portfolio equity investment and gross domestic product growth. The results related to commercial bank & other lending shows that there is negative and non-significant long - run relationship present in between commercial bank & other lending and gross domestic product growth on the other hand the results related to short - run shows that there is negative and non-significant relationship present in between commercial bank & other lending and gross domestic product growth.

Keywords: Panel ARDL (PMG), Capital Inflow, Gross domestic Product Growth and South Asian Economies.

DOI: 10.7176/DCS/9-4-02

Publication date: April 30^th 2019