Macroeconomic Variables the Indicators for the Economic Growth of Pakistan

Abstract

Gross Domestic Product (GDP) is one of the most important measurements used by experts to assess a country's economic health. Almost all Government and financial decision-makers use GDP as a planning and policy formulation indicator. GDP incorporates the market values of all a country's total products and services over a specified period. This study aims to examine the impact of the Foreign Direct Investment (FDI), Trade Volume, and the Exchange Rate of Pakistani Currency Rupees concerning the Dollar on the Gross Domestic Products of Pakistan from 1972 to 2021. The nature of this study is quantitative, so used the deductive approach. The Secondary data for the GDP, FDI, Exchange rate, and the balance of trade was taken from the World Bank’s website from 1971 to 2020. The data analysis technique was the regression method which the E-Views did. From the results of this study, it was found that FDI and the exchange rate have a significant impact on the Economic growth GDP of Pakistan. The effect of the foreign direct investment was positive, while the effect of the exchange rate on the GDP was negative. Balance of trade has an insignificant effect on the GDP of Pakistan. From this study, it is concluded that the Government must create a Peaceful environment for a foreigner to invest in Pakistan because it has a significant positive impact on the economic growth of Pakistan. It is also suggested to the Government that the money value fall should be controlled because it negatively impacts the country's economic development