Impact of FDI and Real Effective Exchange Rate on Saving and Economic Growth Nexus in Pakistan: An Empirical Analysis

Sohail Ahmed Choudhry



Economic growth is influenced by different macro variables. Saving is also important among them. In this study, we attempt to reexamine the saving-growth nexus linking through FDI investment inflows, real effective exchange rate in Pakistan. For analysis we used time series data for net national saving, GDP growth rate, FDI inflows, and real effective exchange rates at constant prices during 1982 to 2015. We employed ADF for unit root,Johansen’s cointegration technique/approach to diagnose robustness of long-run,Model of (ECM) short run dynamics among these variables. Empirical results show that GDP growth rate is significantly positively related to net national saving, in long-run & short-run. These finding in supporting to ”Keynesian approach, permanen-income hypothesis’s validity” in Pakistan. Further results finding identify the impact of exchange rate which has positive impact on national saving in long-run. Complementary role of FDI in saving-growth nexus has positively insignificant impact on national saving in Pakistan. Its coefficient explains, it has very marginal positive impact. 


FDI , Exchange Rate , National Saving



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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.