Economic growth in Pakistan
| A lot of studies have looked at the link between FDI inflows and economic development, the subject remains unresolved due to the diverse findings. The majority of research studies have used a conventional growth accounting methodology to examine the impact of FDI inflows on national income growth and other production parameters. |
The influence of FDI on the growth rate of production was restrained by the existence of diminishing returns in physical capital in the framework of neoclassical models (Solow, 1956). As a result, FDI could only have a level influence on per capita production, not a rate effect. In other words, it was unable to change the pace of output increase over time.
MUHAMMAD USAMA SHOAIB,
Rahim Yar Khan.