Effect of domestic and foreign private investment on economic growth of Pakistan

The foreign and domestic investments have a significant contribution towards economic development for developing and developed economies especially for underdeveloped economies. The primary objective of this study is to investigate the causal connection between domestic and foreign private investment along with its impact on economic growth of Pakistan. Moreover, time-series data has been used from 1980 to 2017 and autoregressive distributed lags (ARDL) method is implied for the data analysis perspective. The long-run findings indicate that foreign private investment has a negative and insignificant impact on economic growth, whereas, domestic investment shows a statistical significance but positive impact on Pakistan economy. The short-run dynamic designates that both domestic and foreign private investment is significantly and positively associated with the growth rate. Whereas, error correction term (ECT) is correcting the disequilibrium of data 42.7% on annual basis. Finally, F-test shows that the overall model of this study is statistically significant.