1Lecturer, Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan
2PhD Scholar, Department of Economics, National College of Business Administration & Economics (NCBA&E)
Online published on 22 June, 2018.
Foreign direct investment (FDI) is often seen as an important catalyst for economic growth in the developing countries. Foreign Direct Investment (FDI) in Pakistan is one of the major external sources of funding to meet obligations of resources gap and goal achievement. FDI has played a vital role in the economic growth of Pakistan. This study attempts to test the influence of FDI on economic growth using variables that include the Capital formation, FDI and Labor Force Participation Rate through different statistical techniques. 40 years data from 1971 to 2010 is used to find out the time trend between the desired variables. The results showed that FDI promote economic growth. The second major finding is that capital formation is an important determinant of economic growth. Thus policy makers must encourage private domestic savings by augmenting the interest rate.
Foreign direct investment, capital formation, economic growth, time series,
