FDI AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM PAKISTAN
Keywords:
FDI, Economic Growth, Human CapitalAbstract
This paper investigates the relationship between FDI and economic growth. Two models have been used to analyze the time series data on Pakistan from 1970-2012. This paper contributes to the existing literature by examining the different empirical methods to estimate the relationship between FDI and economic growth. The vector error correction model results suggest that FDI depends on the economic growth but this relationship is not true vice versa. The second model showed that FDI, human capital and exports are important factors of economic growth. However, the negative relationship between interactive variables (FDI & human capital) and economic growth indicates that low level of human capital affect the economic growth of Pakistan.
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