Foreign Investments in Development, does it really matter? An analysis under Pakistan’s Perspective

Abstract

Foreign investments’ (F.D.I) remains a ‘substantial element’ in the economic development of developing nations, such as Pakistan. In recent times, the F.D.I received a greater consideration as a growth accelerating catalyst in the developing economies. As the F.D.I assists a country in terms of better technology, transfer of skills and the much-required money for development. Studies validate the relationship between the F.D.I and ‘Gross domestic Product’ (G.D.P) with empirical findings. Study uses longitudinal data for the past 21 years, from 1996 till 2016 in order to investigate the effect of F.D.I on the economic development of Pakistan. Apart from F.D.I, other variables such as Political stability, terrorism and Trade openness too included in this study. A ‘least square technique’ is smeared to empirically test impact of ‘independent variables’ on G.D.P. Results demonstrates F.D.I puts a positive impact in the ‘economic growth’, and it is apparent with the help of statistics that there is a greater F.D.I impact whenever there are open trade policies in the country.

Keywords: G.D.P, F.D.I, Trade Openness, Terrorism, Political Instability, Capital accumulation, Capital investments, Capital stocks, International economics, Time series, Time series analysis, Growth capital, Emerging technology

DOI: 10.7176/PPAR/9-2-08