Munich Personal RePEc Archive

Capital inflows and economic growth in Pakistan

Raza, Syed Ali and Sabir, Muhammad Sarwar and Mehboob, Farhan (2011): Capital inflows and economic growth in Pakistan. Forthcoming in: EUROPEAN JOURNAL OF ECONOMICS, FINANCE AND ADMINISTRATIVE SCIENCES

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Abstract

This study intends to investigate the impact of foreign capital inflow on economic growth of Pakistan during the period of 1985-2010. The empirical analysis is based on multiple regression technique. Results show that foreign direct investment (FDI), foreign portfolio investment (FPI) and remittances are positive and significant relationship with economic growth. While foreign aid shown significant but negative relationship with economic growth. Finding further suggests that foreign direct investment, foreign portfolio investment and remittances enhance the economic growth. And it is recommended that country like Pakistan should enhance the domestic resources to break the vicious circle of foreign aid.

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