Factors Affecting Domestic Investment in Pakistan: An Empirical Analysis

Abstract

Basic objective of the study is to develop an insight into the factors affecting total domestic investment in Pakistan, consisting of private investment, public investment and changes in investment stocks. The role of each type of investment is imperative for economic growth and consequently vital for employment generation and poverty alleviation. Hence, it becomes desirable to determine the relationship among variables like economic growth, domestic savings and total domestic investment among others. The study finds a robust relationship across these variables both in short run as well as the long run. The variables like real GDP, domestic savings, rates of return, government spending, exports and imports appear to have a positively significant impact on total domestic investment while the public debt and interest rates surface with a negatively significant effect on total domestic investment in Pakistan.