Relationship of Security Stability with FDI Inflows and Economic Growth Evidence from Pakistan

Abstract

The terrorism and security instability have been remained major obstacles in FDI inflows and economic growth in Pakistan for many years. The economy of Pakistan has suffered economic losses due to multiple factors such as security instability, poor law and order situation, energy crises, corruption, and political instability. However recently the economic situation is moving towards the betterment and foreign investment is gradually enhancing in the country, in fact these all changes are the result of new policy reforms especially in security policy which has brought positive results in the country. The policy makers are anticipating that these positive changes will lead the country towards the sustainable development and economic stability. The China-Pakistan economic corridor is one of solid evidence that foreign investors have got confidence to invest in Pakistan. The main purpose of this paper is to analyze the impacts of current security stability actions like Operation Zarb-e-Azb (army operation) and National Action Plan on foreign direct investment inflows and economic growth in Pakistan. We will analyze the Data of related economic indicators like, GDP and foreign direct investment inflows before and after these security actions. The outcomes of this analysis will give a clear clue that how far security stability can influence the FDI inflows and economic growth in the country.

Keywords: Operation Zarb-e-Azb, National Action Plan, Security stability, FDI inflows, Economic Growth.