Impact of Foreign Investment, Labor Force and Interest Rate on Economic Growth: A Case of Pakistan (Under CPEC Project Contribution Countries)

Abstract

Belt and Road Initiative appears as a worldwide investment of China. CPEC is fundamental part of BRI worldwide project. Labor market is demand for specialized human skill of expanding the investment activity for Pakistan under CPEC project little part of BRI project. This paper explores the relation between foreign direct investment, labor force, interest rate, terrorism, export and economic growth over using time series data from 1985 to 2016. Economic growth used as dependent variable and FDI, Labor and interest rate terrorism and trade used as an explanatory variable. Here utilized ADF test, unit root test, Johansen co-integration and Granger causality methods were utilized shows that the relationships between the variables in long run time period. The Error Correction Model has been utilized to explore the relationship between the labor market independent variable and economic growth dependent variable. The consequence of different procedures demonstrates that labor market has measurably critical effect on gross economic growth. The interest in China Pakistan Economic Corridor will required more dexterous, specialized and non-specialized work drive in this manner to include that labor wages as of late are more imperative for growth of Pakistan economy. On the other hand, the analytical result documented to all the characterize variables in our model boots economic growth so work constrain for growth of Pakistan economy in short run is more essential contributing growth. Contribution/ Originality: The paper's primary contribution is to find the impact of foreign investment, labor force and interest rate on economic growth in Pakistan.

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