The paper examines the impact of private investment on Pakistan's economic growth through a time series analysis for the period 1980-2017. Economic growth is represented with real per-capita GDP, private sector credit as an envoy of private investment (DCPS), and other variables are foreign direct investment, the discount rate, and the inflation rate. The stationarity properties of the data are investigated through Augmented Dicky Fuller test (ADF), and ARDL co-integration technique is used to estimate the equation. The findings show a significant and negative association between LDPS and real GDP: that 1% increase (or decrease) in domestic credit to private sector, on average, causes a 0.7% decrease (or increase) in real per-capita GDP in the long-run. It is also found that discount rate and GDP deflator have a negative impact on economic growth. The study concluded that private investment has negative impact on economic growth in Pakistan. It recommends to build a favourable economic environment, and incentivize FDI in Pakistan due to its positive and significant impact on GDP.
Abdaljawwada, O. N. A., & Sarmidi, T. (2018). Private Sector Investment and Economic Growth in Palestine (1990-2015). International Journal of Islamic and Civilizational Studies.
Ali, S., Hashmi, S. H., & Hassan, A. (2013). Relationship between political instability and domestic private investment in Pakistan: A time series analysis. Pakistan Business Review, 15(1), 1-26.
Attefah, E. K., & Enning, D. K. (2016). An OLS approach to modelling the determinants of private investment in Ghana. International Journal of Academic Research in Business & Social Sciences, 6(4), 201-226.
Badawi, A. (2005). Private capital formation and macroeconomic policies in Sudan: application of a simple cointegrated vector autoregressive model.[ Retrieved from]. Paper presented at the Economic Research Forum.
Baghebo, M., & Edoumiekumo, S. (2012). Domestic private capital accumulation and economic development in Nigeria (1970-2010). International Journal of Academic Research in Business & Social Sciences, 2(5).
Bivens, J. (2012). Public investment: The next ‘new thing’for powering economic growth. Economic Policy Institute, Briefing Paper, 338.
Djankov, S., Ganser, T., McLiesh, C., Ramalho, R., & Shleifer, A. (2010). The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2(3), 31-64.
Ekpo, U. N. (2016). Determinants of private investment in Nigeria: An empirical exploration. Journal of Economics & Sustainable Development, 7(11), 80-92.
Fadhil, M. A., & Almsafir, M. K. (2015). The role of FDI inflows in economic growth in Malaysia (Time Series: 1975-2010). Procedia Economics & Finance, 23, 1558-1566.
Fournier, J.-M. (2016). The positive effect of public investment on potential growth. OECD Library.
Haque, S. T. (2013). Effect of public and private investment on economic growth in Bangladesh: an econometric analysis. Research Study Series No FDRS05/, Finance Division, Ministry of Finance.
Hundie, S. K. (2014). Savings, investment and economic growth in Ethiopia: Evidence from ARDL approach to co-integration and TYDL Granger-causality tests. Journal of Economics & international finance, 6(10), 232-248.
Kalu, C., & Mgbemena, O. (2015a). Banking Sector Reforms in Nigeria’s Fourth Republic: A Review of Evidence’. Journal of Economics & Sustainable Development, 6(6), 37-44.
Kalu, C., & mgbemena, O. (2015b). Domestic private investment and economic growth in Nigeria: Issues and further consideration. International Journal of Academic Research in Business & Social Sciences, 5(2), 302.
Kartikasari, D. (2017). The Effect of Export, Import and Investment to Economic Growth of Riau Island Indonesia. International Journal of Economics & Financial Issues, 7(4), 663-667.
Khan, S., & Khan, M. A. (2007). What determines private investment? The case of Pakistan. Retrieved from https://ideas.repec.org/p/eab/financ/22202.html
Kirya, I. K., & Yudiaatmaja, F. (2015). PENGARUH INVESTASI, TENAGA KERJA, DAN EKSPOR TERHADAP PERTUMBUHAN EKONOMI DI KABUPATEN BULELENG PERIODE 2008-2012. Jurnal Manajemen Indonesia, 3(1).
Mohamed, S. E., & Sidiropoulos, M. (2008). Finance-growth nexus in Sudan: empirical assessment based on an application of the autoregressive distributed lag (ARDL) model. Üçüncü Uluslararas? Ö?renci Konferans? “Social Sosyal Bilimlerde Ampirik Modelleme”. ?zmir Ekonomi Üniversitesi Yay?nlar?, ?zmir, Türkiye, 47-66.
Mohan, R. (2008). Growth record of the Indian economy, 1950-2008: A story of sustained savings and investment. Economic Political Weekly, 61-71.
Mohsen, A. S. (2015). Effects of exports and imports on the economic growth of Syria. Euro-Asian Journal of Economics & Finance, 3(4), 253-261.
Murty, K., & Soumya, A. (2007). Effects of public investment on growth and poverty. Economics & Political Weekly, 47-59.
Nwakoby, C., & Bernard, A. U. (2016). Effect of private sector investment on economic growth in Nigeria. NG-Journal of Social Development, 417(3947), 1-18.
Osman, E. G. A. (2014). The impact of private sector credit on Saudi Arabia Economic Growth (GDP): An Econometrics model using (ARDL) Approach to Cointegration. Am Int J Soc Sci, 3(6), 109-117.
Popescu, G. H. (2014). FDI and economic growth in Central and Eastern Europe. Sustainability, 6(11), 8149-8163.
Samargandi, N., Fidrmuc, J., & Ghosh, S. (2014). Financial development and economic growth in an oil-rich economy: The case of Saudi Arabia. Economic modelling, 43, 267-278.
Sari, M., Syechalad, M. N., & Majid, S. A. (2016). Pengaruh investasi, tenaga kerja dan pengeluaran pemerintah terhadap pertumbuhan ekonomi di Indonesia. Jurnal Ekonomi Dan Kebijakan Publik Indonesia, 3(2), 109-115.
Tahir, S. H., Shehzadi, I., Ali, I., & Ullah, M. R. (2015). Impact of bank lending on economics growth in Pakistan: an empirical study of lending to private sector. American Journal of Industrial & Business Management, 5(08), 565.
Tuan, C., Ng, L. F., & Zhao, B. (2009). China's post-economic reform growth: The role of FDI and productivity progress. Journal of Asian Economics, 20(3), 280-293.
UN. (2019). The role of public investment in social and economic development. Retrieved from Geneva: https://unctad.org/system/files/official-document/webdiae20091_en.pdf
In-Text Citation: (Anwar et al., 2021)
To Cite this Article: Anwar, U., Nawaz, A. R., Raza, M. A., Nasar, A., & Ahmad, I. (2021). Role of Private Investment in Economic Growth in Pakistan: A Time Series Analysis (1980-2017). International Journal of Academic Research in Business and Social Sciences, 11(4), 378-391.
Copyright: © 2021 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
