Title: Role of Private Investment in Economic Development of Pakistan
Abstract: Investment plays a very important and positive role for the progress and prosperity of any country. Many countries rely on investment to solve their economic problems such as poverty, unemployment etc. Pakistan as a developing country aims at achieving socio-economic development. The Pakistani government is working very hard to attract investors for investment in different sectors of the economy. For this, the government has taken many steps to encourage private investment and to increase the pace of economic development in the country. Reasons that Pakistan is good destination for private investment include: Its wide range of sectors open for investment, the Pakistani expanding infrastructure, cheap labor, and stability and Predictability of its economy. This study is expected to contribute to an important aspect of the economy of Pakistan known as Private investment and its determinants during the financial period from 1986-87 to 2007-08, and the factors which determine it. The study will analyze those different determinants including interest rates, GDP, inflation rate, public investment in infrastructure, domestic savings, subsidies, taxes and ratio of yearly payback debt to the GDP. Also, it will test significance of these determinants.The study will discuss the local environmental conditions and what should be done so that local products may have improved quality not only for local consumption but also for exports, especially for the Agriculture Sector in order to improve the agro-industrial products providing raw material to the other sector of Industry.This study intends also to investigate the impact of these different factors on the private investment of Pakistan through a model where private investment would be used as a dependant variable and such explanatory variables as interest rate, governmental development expenditures, inflation rate etc. The study expects to prove that Indirect taxes have a negative impact on private investment. The study is expected also to prove that the interest rate has a negative impact on private investment. GDP, Domestic savings and Government development expenditures (PSDP) are expected to have positive relationships with private investment. The study expects also to prove that there is a negative relation between debt servicing and private investment.This study will be useful for the finance decision makers in Pakistan. It is expected to recommend more incentives by Pakistani government for private investment. Due to time limitations, the study will not consider an important part of private investments that is foreign direct investment (FDI). Still, it will be recommended that special efforts should be made to attract FDI of Pakistanis living, and working abroad by improving the legal and socio economic environment for their investment under a stable political government.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
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Cited By Count: 14
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