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

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  • Mughal, Mazhar

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.

Suggested Citation

  • Mughal, Mazhar, 2008. "Boon or bane- role of FDI in the economic growth of Pakistan," MPRA Paper 16468, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:16468
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    References listed on IDEAS

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    Cited by:

    1. Irfan Ahmad Khan & Mazhar Mughal & Junaid Ahmed & Hongbo Cai, 2017. "Home and Host country determinants of financial investment flows to Pakistan," Economics Bulletin, AccessEcon, vol. 37(1), pages 361-376.

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    More about this item

    Keywords

    Foreign direct investment; Economic growth; Pakistan; Human capital; Domestic investment.;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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