Subscribe

Subscribe to our Newsletter and get informed about new publication regulary and special discounts for subscribers!

ILSHS > Volume 16 > Impact of Foreign Direct Investment (FDI) on GDP:...
Impact of Foreign Direct Investment (FDI) on GDP: A Case Study from Pakistan
< Back to Volume

Impact of Foreign Direct Investment (FDI) on GDP: A Case Study from Pakistan

Full Text PDF

Abstract:

This research study is related to FDI and GDP and the main aim of this research study is to validate the relationship between them. Foreign direct investment (FDI) is considered as a growth accelerating component that has received a great attention in developed countries even in developing and less developed countries during recent years. Now FDI has greater importance in closed economy. FDI benefits any economy in terms of technology, skilled labor and skills transfer to the host countries. For data collection, 30 year data from 1983 to 2012 was collected and the cobb-Douglas Production function is used to test the relationship. Our research variables are Gross Capital Formation (K), Labor (L), Health Expenditure (H), FDI and openness to trade in export oriented economy (OP*FDI). We have followed the Bhagwati’s hypothesis that was: FDI has greater impact on GDP in the export oriented economy. For data analysis, we have examined the descriptive statistics, correlation and regression model. For this we incorporate the production function in regression model. In brief, our results show that there is a positive relationship between FDI and GDP in Pakistan. But, Pakistan has not sufficient flow of FDI during past decades. And main point to consider which is evident through statistics and results is that there is greater impact of FDI in the open trade policy regimes. It is also concluded that FDI impact may be situation and culture related. So, the extent of FDI economic benefits cannot be predicted.

Info:

Periodical:
International Letters of Social and Humanistic Sciences (Volume 16)
Pages:
73-80
DOI:
https://doi.org/10.18052/www.scipress.com/ILSHS.16.73
Citation:
N. Iqbal et al., "Impact of Foreign Direct Investment (FDI) on GDP: A Case Study from Pakistan", International Letters of Social and Humanistic Sciences, Vol. 16, pp. 73-80, 2014
Online since:
November 2013
Authors:
Nadeem Iqbal, Naveed Ahmad, Zeeshan Haider, Sonia Anwar
Keywords:
Capital, Cobb-Douglas Production Function, Export Promotion Policy, FDI, GDP, Labor
Export:
RIS, BibTeX, Text
Distribution:
Open Access

Creative Commons License
This work is licensed under a
Creative Commons Attribution 4.0 International License

References:

Adeniyi O., Omisakin O., Foreign Direct Investment, Economic Growth and Financial Sector Development in Small Open Developing Economies. Economic Analysis & Policy 42(1) (2012).

Agrawal G., Khan M. A., European Journal of Scientific Research 57(2) (2011) 257-264.

Aizhan K., Macarena M. D. (2011). Impact of Foreign Direct Investment on Economic Growth in Kazakhstan International Conference on Sociality and Economics Development 10.

Alfaro L. (2003). Foreign Direct Investment and Growth: Does the Sector Matter? Journal of Economics and Social Sciences.

Athukorala P. P. A. W. (2003). The Impact of Foreign Direct Investment for Economic Growth: A Case Study in Sri Lanka. International Conference on Sri Lanka Studies.

Atique Z., Ahmad M. H., Azhar U., The Pakistan Development Review 43(3) (2004) 707-718.

Ayanwale A. B. (2007). FDI and Economic Growth: Evidence from Nigeria. AERC Research Pape, 33.

Barro R., Journal of Political Economy 98(5) (1990) S103-S125.

Borensztein E., J. De Gregorio, J. W. Lee, How Does Foreign Direct Investment Affects Economic Growth?, Working Paper No. 5057, Cambridge, MA.

Borensztein E., Gregorio J. D., Lee, J. -W., Journal of International Economics 45 (1998) 115-135.

Economic Survey of Pakistan, (2005-2012). Finance Division, Government of Pakistan. Federal bureau of statistics, finance Division, (2012).

Hussein M. A., Countries International Review of Business Research Papers 5(3) (2009) 362-376.

Karimi, Sharif, M., Yusop, & Zulkornain. (2009). FDI and Economic Growth in Malaysia. Munich Personal RePEc Archive.

Khaliq A., Noy A., Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Data in Indonesia. Journal of Economics and Sustainable Development 7 (2007).

Moss M., The Measurement of Economic and Social Performance. National Bureau of Economic Research (1997) 193-232.

Onakoya A. B., Foreign Direct Investments and Economic Growth in Nigeria: A Disaggregated Sector Analysis Journal of Economics and Sustainable Development 3(10) (2012).

Ray S. (2012). Impact of Foreign Direct Investment on Economic Growth in India: A Co integration Analysis Advances in Information Technology and Management (AITM), 2(1). www. sbp. pk. com.

Zhang K. H., FDI and economic growth in china. Journal of Economics and Sustainable Development 3 (2005).

Show More Hide
Cited By:

[1] S. Jawaid, S. Saleem, "Foreign capital inflows and economic growth of Pakistan", Journal of Transnational Management, Vol. 22, p. 121, 2017

DOI: https://doi.org/10.1080/15475778.2017.1302784

[2] S. Jawaid, S. Abbas, S. Saleem, "Democracy and international financial integration in Pakistan", Indian Growth and Development Review, Vol. 10, p. 16, 2017

DOI: https://doi.org/10.1108/IGDR-07-2016-0031

[3] R. Sharmin, S. Khandaker, "The Determinant of Foreign Direct Investments, Evidence from Bangladesh", SSRN Electronic Journal, 2015

DOI: https://doi.org/10.2139/ssrn.2701598