Impact of Foreign Direct Investment and Remittances on Economic Growth of Pakistan
Authors
SHOAIB SHAH, MUNEER HUSSAIN, MANZOOR ALI and MIR HASSAN
Abstract
Foreign Direct Investment (FDI), Remittances and the Trade Openness all are the important factors for any economy. FDI has direct impact on the transfer of technology with the help of multinational companies, whereas Remittances inflow also has direct impact of the living standards of the local people, health issues and the life style. Trade openness (Import & Export) both are the most important factors for an economy which will make the direct and long-term relationship with the economy of Pakistan. This research is only about investigating the impact of FDI, Remittances and Trade openness on Economic growth of Pakistan, and need to determine the relationship between the FDI, Remittances and Trade openness. Secondary data on macroeconomic variables have been used to assess the relationship. Annul data has been collected from the 1980 to 2018 for all variables. Study undertakes unit root test to test for stationarity first and then ARDL model has been applied for data analysis. ARDL Bound and Ramsey Reset test has been done to know the long- and short-term relationship between the variable, which indicates that FDI, Remittances and the trade has Long-term relation and positively correlated with economic growth of Pakistan. Whereas our analysis shows that there is impact FDI, Remittances and Trade openness on Economic growth of Pakistan, other hand result shows that there is long term relationship between FDI, Remittances and Trade openness with GDP which represents the economic growth of Pakistan.
