The Relationship between Financial Development and Foreign Direct Investmentand its Impact on Economic Growth ofPakistan

Muhammad Ali, UsmanUllah Khan (), Dil Jan () and Sabiha Parveen ()
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UsmanUllah Khan: Department of Economics, Hazara University Mansehra, Pakistan
Dil Jan: Department of Economics, Islamia College Peshawar, Pakistan
Sabiha Parveen: The Women University Multan, Pakistan

iRASD Journal of Economics, 2021, vol. 3, issue 1, 27-37

Abstract: This research investigates the interaction between foreign direct investment (FDI) and financial development (FD) to promote economic growth in Pakistan for the period 1980 - 2017. Using Autoregressive distributed lag (ARDL) bound estimation techniques, the study showed that FDI, trade openness and government expenditures has a significant impact on economic development in Pakistan. More interestingly, it is evident that the interaction effect of FDI and FD has a significant positive impact on economic growth of Pakistan. This research can play an important role in policymaking to boost FDI and FD for the economic prosperity of Pakistan.

Keywords: Foreign Direct Investment; Financial Development; Economic Growth; ARDL; Pakistan (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ani:irdjoe:v:3:y:2021:i:1:p:27-37

DOI: 10.52131/joe.2021.0301.0023

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