Impact of FDI on Economic Growth: Evidence from Pakistan

Authors

Hafiz Muhammad Abubakar Siddique Federal Urdu University, Islamabad, Pakistan Author
Romana Ansar Punjab Group of Colleges, Bhara Kahu Campus, Islamabad, Pakistan Author
Muhammad Mustasim Naeem National College of Business Administration and Economics, Lahore, Pakistan Author
Sajid Yaqoob University of Lahore, Islamabad, Pakistan Author

FDI, Economic Growth,, ARDL Bounds Testing Approach,, Pakistan

This study investigates the nexus between foreign direct investment and economic growth for Pakistan for 1980-

2016. Using autoregressive distributed lag bounds co-integration and granger causality test. The results of ARDL

bounds test show the existence of co-integration between economic growth, FDI, trade, physical capital and

human capital. The results indicate the unidirectional causality from economic growth to FDI, to physical capital

and to trade. The findings also express the one-way causality from human capital to labour force and physical

capital. The bidirectional causality is found between physical capital and FDI, and between physical capital and

human capital. The study suggests to adopt such policies that enhance human skills to attract more FDI for

economic growth.