Comparative analysis of foreign capital inflows and domestic resources in the economic growth of Pakistan
2012
Fatima, S. (University of Agriculture, Faisalabad (Pakistan). Dept. of Development Economics) | Azeem, M.M. (University of Agriculture, Faisalabad (Pakistan). Dept. of Development Economics) | Elahi, E. (University of Agriculture, Faisalabad (Pakistan). Dept. of Environmental and Resource Economics) | Abid, M. (International Water Management Inst., Lahore (Pakistan))
The present study was designed to investigate the impact of foreign capital inflows and domestic resources on the economic growth of Pakistan. For this purpose, the data (year 1975 to 2008) on different parameters was analyzed by multiple linear regression employing ordinary least square method. Results of empirical analysis revealed that foreign direct investment has positive and statistically significant contribution in the economic growth of Pakistan. However, foreign aid has insignificant impact on the economic growth of country primarily due to the improper utilization of these funds. Moreover, domestic resources were found to contribute more in accelerating the economic growth rate as compared to foreign resources. It was concluded that reliance on foreign direct investment and domestic resources is the best alternative to finance growth. However, the dependence on the foreign aid must either be stopped or utilized only for productive purposes.
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