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Purpose: Present study is based on the impact of Foreign Direct Investment on the Economic Growth of Pakistan. In this paper, a time-series data has been collected for the variables Foreign Direct Investment (FDI), Gross Capital Formation (GCF), Inflation rate (IR), and Gross Domestic Product (GDP) since the year 1970-2018 from World Bank Development Indicators. Some tests have been performed regarding the significance of data using regression, correlation analysis, and normality test (Kolmogorov-Smirnov) using SPSS software. In this research, an alternative hypothesis has been built to analyze the significance of this data. Discussions and recommendations have been given in this paper to implicate on the economy for growth and development measures.Design/Methodology/Approach: The data from WDI and other worldwide authentic sources were used from 1970-2018 to perform models using regression analysis and advanced machine learning methods.Findings: Regression and correlation analysis have been used on the variables. Its result indicates a positive relationship among the variables FDI and GDP whereas it shows a negative correlation among the variables GCF, IR concerning GDP.Limitations: Data is predictable based on the variables taken. It has been collected for the recent years up till 2018. It can only predict a certain variation caused by the increase of a particular independent variable that is FDI, GCF, and IR. Future variation in variables cannot be predicted. The results are specifically related to Pakistan and cannot be justified for other countries.Practical implications: Strong industrial network clusters must be formed by the policymakers to gain investor loyalty and will also help companies to form capital and also sustain a strong supply chain management. Higher FDI inflows will aid the ongoing project of Pakistan which is the Diamer Bhasha Dam. Due to the pandemic stated as COVID-19, FDI will actively play a role in maintaining ventilators in hospitals that have become a current need. An increase in inflation shows a negative impact on the economy of Pakistan. Considering the prevailing situation where unemployment level, job opportunities not being available and no productivity level is being achieved due to the current Pandemic i.e. COVID-19, policymakers must take initiative in reducing consumer prices so that all the preceding situations could have positive effects on the economic growth of Pakistan |
