Impact Of Foreign Direct Investment On Growth And Inflation Of A Country

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This paper investigates the impact on foreign direct investment due to the growth and inflation of a country. Secondary data has been gathered from the websites of ADB and SBP during the time period of 1990 to 2011 for this purpose. In this paper, three variables are used FDI, GDP, INF. FDI is taken as dependent variable whereas GDP and INF are taken as independent variables. To assess the impact of FDI on growth and inflation time series data regression has been used. The result suggests that there is a positive relationship exists between foreign direct investment (FDI) and inflation and there exist a negative relationship between gross domestic product (GDP) and foreign direct investment (FDI).…show more content…
"Gross " because the decline of the value of capital used in the production of goods and services has not been subtracted from the total value of GDP; 2. "Domestic" for it detail only to activities within a domestic economy regardless of ownership (alternatively: "national" if based on nationality); 3. "Product" apply to what is being produced, i.e. the goods and services, otherwise given as the output of the economy. This product/output is the end result of the economic activities within an economy. The GDP is the worth of this output. 4. “Value is made up of cost and quantity”. An economy can increase the value of its GDP either by multiplying the cost that will be paid (e.g. by raising quality) for its goods and services, or by incremental the amount of goods or services that it produces. 5. In arrangement to avoid double-counting, it is essential that GDP value each product or service only once, i.e. the "final value". So, Gross Domestic Product is the contradiction point of three sides of the economy: demand, production and income. (Yanne Goossens 2007). Ekpo, A.H. (1995) investigated that the element like higher gain from investment, low labor and production cost, political stability, enduring investment climate, official infrastructure facilities and helpful regulatory atmosphere also serve to invite and guard FDI in the host country.Chadee and Schlichting (1997) investigated some of the aspects of FDI in the
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