Abstract
The study on the impact of official developmental assistance (ODA) and foreign direct investment (FDI) on gross domestic production (GDP) revealed that ODA has replaced FDI in terms of it contribution. The beta for ODA is 34.503 where as FDI it is 17.1592 means that ODA’s contribution is twice that of FDI which shows that economy is exposed to the risk of extra reliance on aid which is a nondurable source which could weaken the state growth at any time. ECM (Error Correction Mechanism) was used to find out the long term equilibrium that suggest non spurious relation but also came to the conclusion that the dependency of GDP on FDI and ODA is more significant as the residual’s insignificance suggests. In this case it is recommended that reliance on ODA has increased which is sign of contingent economy that can vanish any time the foreign supports stops the policy makers should focus on this issue and should develop policies to lessen the dependency on ODA and turn their focus towards FDI which can bring the real long term growth in the economy
Naveed Hussain Shah,, Noman Khan,, Muhammad Asad Khan, Qaiser Aman. (2014) Impact of Foreign Capital Inflows (FCI) on Economic Growth in Pakistan, Journal of Managerial Sciences, Volume 8, Issue 2.
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