Foreign Capital Dynamics and Macroeconomic Performance in South Asia

Abstract

Foreign capital is regarded as a vital resource for raising a developing nation's standard of living and wellbeing. Researchers and academics are concentrating on analyzing how foreign capital affects emerging nations. This study examines how foreign capital affects the economic growth of six South Asian nations between 2001 and 2020. The primary measures of foreign capital utilized in this study are official development assistance, foreign direct investment, and migrant remittances. The GDP growth rate is a measure of macroeconomic performance. The empirical analysis is conducted using sophisticated panel data estimate methods, Fully Modified Ordinary Least Square (FMOLS), and Dynamic Ordinary Least Square (DOLS). The study concludes that official development assistance has a negative impact on economic growth, whereas remittances and foreign direct investment have a beneficial effect.