Foreign Direct Investment, Trade Openness, Institutional Performance and Economic Growth in Pakistan

Abstract

The study aims to investigate how foreign direct investment, trade openness, and institutional performance affect economic growth in Pakistan for the period of 1990- 2022. Statistical and econometric methods have been used to investigate the research empirically. Initially we checked stationarity by using the augmented Dickey-Fuller unit root test and obtained mixed findings of the stationary in the result. Many relevant studies have been examined for this purpose and then the model is constructed by approaching economic growth as a dependent variable and trade openness, foreign direct investment, institutional performance, gross fixed capital formation and employed labor force as explanatory variables. To find short-run and long- run effects of economic growth. ARDL modeling approach was applied which is the most appropriate technique over some other techniques of integration after scrutinizing the stationarity of data through the ADF test.