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Economic Analysis of Foreign Direct Investment and Its Impact on Trade and Growth in Pakistan

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SUBMITTED TO THE COURSE FACILITATOR:
“SIR FARHAN MEHBOOB”
AS PER THE PARTIAL REQUIRMENT OF THE COURSE:
“ECONOMIC ANALYSIS FOR MANAGEMENT”
SUBMISSION OF RESEARCH PAPER ON TOPIC:
“ECONOMIC ANALYSIS OF FOREIGN DIRECT INVESTMENT AND ITS IMPACT ON TRADE AND GROWTH IN PAKISTAN” SUBMITTED BY:
“SHIRAZ KHAN”
(6001)

TOPIC
Economic Analysis of Foreign Direct Investment and its Impact on Trade and Growth in Pakistan AUTHOR
Shiraz Khan
Business Graduate,
Iqra University,
Karachi, Pakistan.

ABSTRACT
Foreign direct investment (FDI) in context of Pakistan is one of the major contributors that help Pakistan to minimize the gap of financial resources and funds. FDI has played a significant and vital role in the domestic markets of Pakistan and has contributed in the increase in the exports, capital formation and the human skill development of Pakistan. Net FDI balances in Pakistan in 1976 were $8.22 million which grew to $1.24 billion by the end of 2011. The present research study is an empirical analysis of the impact of FDI on Pakistan’s economy with the help of time series data. The study applied the linear regression analysis and produced a model to determine and predict the impact and relationship of FDI on the overall Gross Domestic Product (GDP) of Pakistan. The results of this study showed that there is a significant relationship between the GDP and FDI of Pakistan and FDI contributes positively towards the GDP. The results of the GDP model suggested that GDP will increase 27.636 times of FDI with an increase of each unit of the FDI. Key words:

Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Pakistan.

INTRODUCTION
Foreign Direct Investment refers to the investment made by a company or an entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a...