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To find out determinants of economic growth in Pakistan and Bangladesh, ARDL technique of estimation was employed. Time series data was obtained from World Development Indicators (WDI; 2021) for the period 1990-2019 for both countries. The findings suggest that foreign direct investment has a negative and significant effect on Pakistan's GDP growth while in case of Bangladesh, no relationship was found out between economic growth and foreign direct investment. The relation between domestic investment and economic growth is positive and significant in case of both countries. Government expenditures have a positive but insignificant effect on the GDP growth of Pakistan while there is negative and insignificant impact of government expenditures on economic growth in Bangladesh. Inflation affects economic growth of both countries positively and significantly in case of Pakistan but insignificantly in case of Bangladesh. Relationship between foreign trade and GDP growth is negative and significant in case of both countries. The estimate of error correction term is -3.592 in case of Pakistan and -0.784 in case of Bangladesh, implying that there is short run relationship between economic growth and its determinants in case of both countries respectively. Diagnostic and stability tests were satisfactory. Both the countries should attract foreign investors to boost the investment activities, increase consumption on development activities instead of non-developmental expenditures and increase exports while reducing imports.

Keywords: GDP Growth, Foreign Direct Investment, Inflation, Government Expenditures, Trade.