Nexus Between FDI, Economic Growth, Industrialization, and Employment Opportunities: Empirical Evidence from Pakistan

Irfan Khan, Jian Xue (), Shah Zaman and Zunair Mehmood ()
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Jian Xue: Shaanxi University of Science and Technology
Zunair Mehmood: Shaanxi University of Science and Technology

Journal of the Knowledge Economy, 2023, vol. 14, issue 3, No 42, 3153-3175

Abstract: Abstract This study investigates FDI and employment opportunities arising in Pakistan from the Gwadar seaport. Moreover, it empirically examines the impact of gross capital formation, gross domestic income, economic growth, industrialization, and population growth on employment opportunities. Annual data of 30 years from 1990 to 2019 is used and retrieved from the World Development Indicator website. For unit root testing, this study employed ADF and PP tests. The ARDL bound test approach is applied to confirm the existence of a long-run relationship that is further extended for long-run and short-run estimations of the selected variables. The findings of the ARDL model show that increasing foreign direct investment, gross capital formation, and industrialization increases the employment opportunities in Pakistan during the long run and short run. In contrast, gross domestic income, economic growth, and population growth negatively connect with employment opportunities for both the long term and short term in Pakistan. Moreover, the outcomes of the fully modified OLS approach used as a robust analysis also support the findings of the ARDL. Lastly, this study proposes future policy recommendations which help increase foreign direct investment inflow and employment opportunities in Pakistan.

Keywords: FDI; Economic growth; Industrialization; Employment opportunities; Gwadar seaport Pakistan; ARDL model (search for similar items in EconPapers)
JEL-codes: J21 J23 J24 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-022-01006-w

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