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  • Summary FDI PE EG

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    Muhammad Aamir
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    Public spending is a factor contributing to capital accumulation, which is the key determinant of growth. An increase of public expenditures requires an increase of tax, which directly reduces the benefits of taxpayers. Results suggest that while FDI and public capital play important roles in promoting economic growth,too much government public non-capital expenditure has a negative impact on economic growth.

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    Public spending is a factor contributing to capital accumulation, which is the key determinant of growth. An increase of public expenditures requires an increase of tax, which directly reduces the benefits of taxpayers. Results suggest that while FDI and public capital play important roles in promoting economic growth,too much government public non-capital expenditure has a negative impact on economic growth.

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    5 views1 page

    Summary FDI PE EG

    Uploaded by

    Muhammad Aamir
    Public spending is a factor contributing to capital accumulation, which is the key determinant of growth. An increase of public expenditures requires an increase of tax, which directly reduces the benefits of taxpayers. Results suggest that while FDI and public capital play important roles in promoting economic growth,too much government public non-capital expenditure has a negative impact on economic growth.

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    Attribution Non-Commercial (BY-NC)
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    Public spendings,FDI and Economic Growth.

    Summary
    The study focuses on the interrelationship among public spending, Foreign Direct Investment (FDI) and economic growth in case of Pakistan for the period 1975-2008.Foreign direct investment (FDI) is often seen as an important catalyst for economic growth, it is the driving force in the growth process; it enhances human capital and improves technology.On one hand, public expenditure is a factor contributing to capital accumulation, which is the key determinant of growth,on the other hand, an increase of public expenditures requires an increase of tax, which directly reduces the benets of taxpayers and lowers the economic growth rate eventually.

    Variables:
    The Model Equation shows the relation of different factors on output of country. Y=A+K+L+F+T+ Where, Y represents output, K is capital, L is labor, F is foreign direct investment, A is total factor productivity and T is Trade. [is error]

    Methodology:
    Augment Dickey Fuller (ADF) Unit Root Test for non stationary variables. OLS estimation output (Base line regression). Estimation output (Threshold Regression)

    Conclusion:
    The results of the study suggest that while FDI and public capital play important roles in promoting economic growth,too much government public non-capital expenditure has a negative impact on economic growth. The results also show that excessive spending in public capital expenditure can hinder the benecial eects of FDI.Also annual growth in public spending should not exceed 6% to have beneficial effect of foreign capital inflows. Notes: *PS is negitevly corelated with Economic growth in Pakistan because a large proportion of public spending is attributed to non development expenditure like defense and interest payments on debt. *Pakistan could not get the technology and knowledge spillovers emanating from foreign capital inflow to the optimal level. The inefficient role of infrastructure and its less absorbing capacity has been the major hurdles in reaping full benefits of FDI. *Further research areas, Analysis of interaction among employment, FDI and economic growth. Interrelationship b/w FDI, fiscal structure and economic growth.
    By Muhammad Aamir Malik

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