Impact of Foreign Direct Investment and Some Other Factors on Economic Growth of Pakistan

Abstract

Terrorism and Gross Domestic Product (GDP) is the burning and most important issue for the researchers and policy makers of the modern world since 20^th century. There are many factors that affect the economic growth of a country but here we discuss only few of them. Foreign Direct Investment (FDI) has a significant and important effect on economic growth of a country especially developing country like Pakistan. The main objective of this article to check the affect of some explanatory variables on economic growth of Pakistan. I have taken one dependent variable and four explanatory variables. Foreign Direct Investment (FDI) is our main explanatory variable and other includes Exports, Inflation rate and Terrorist attacks. Although terrorist attack is not economic variable but we take it in this study because economy of Pakistan disturb worstly due to terrorism. We take the data from years 1973-2013. Ordinary least square (OLS) has been applied to investigate the effect of explanatory variables on GDP of Pakistan. The results show that FDI has Positive significant effects on GDP of Pakistan.

Keywords: Terrorist attacks, FDI inflows, Inflation rate, Exports of goods and services