The Impact Foreign Direct Investment on Economic Growth in Pakistan Since 1980

Abstract

This research is about to check the impact of Foreign direct investment on economic growth of Pakistan from 1980 to 2011. FDI is of the most important factor for the economic growth in the developing countries. Economic growth is effected from FDI by many domestic investment, increase the level of human capital and giving technology to the other countries who interesting to invest in the host country. The managerial as well as marketing skills increase also in the host country. Here we find the relation between the foreign direct investment and economic growth taking some other variables like labor, domestic capital and exports taking into consideration in the model. Co-integration model is used to test the relationship between the variables. The results show a significant relationship between foreign direct investment and economic growth. The result also suggest that giving suitable environment to the foreign investors to strengthen the FDI.