Boon or bane- role of FDI in the economic growth of Pakistan

Mazhar Mughal

MPRA Paper from University Library of Munich, Germany

Abstract: We study the effects of FDI inflows on the Pakistani economy over the period 1961-2005 using the Johansen co-integration technique and the Vector Error Correction Model. We determine that FDI does have a positive effect on the economy, particularly in the short term. Foreign investment is found to have a less important role than domestic investment. However, FDI impacts negatively on human capital. We can thus say that FDI has neither been an absolute boon nor a downright bane for Pakistan. On étudie l'impacte des IDE sur l'économie Pakistanaise pendant la période 1961-2005 en utilisant la technique de cointégration de Johansen et le VECM. On trouve que les IDE ont un effet positif sur l'économie particulièrement à court terme. Les investissements étrangers ont un rôle moins important que celui des investissements domestiques. En revanche, l'impacte sur le capital humain est négatif. Par conséquent, on peut conclure que les IDE ont été ni bénéfiques, ni néfastes.

Keywords: Foreign direct investment; Economic growth; Pakistan; Human capital; Domestic investment. (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cwa and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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