Impact of Foreign Capital Inflows (FCI) On Economic Growth in Pakistan [1975-2004]

Abstract

The Two-Gap Model suggests that the Poor countries have to rely on the foreign capital inflows (FCI) to fill the two Gaps: Import-Export Gap and the SavingsInvestment Gap. There are many forms of the foreign capital inflows like FDI (Foreign Direct Investment), External loans & Credit, technical assistance, Project & non-project aid etc. So, UDC’s (including Pakistan) have to rely on the Foreign aid, Foreign Debts, FDI and portfolio investments. The role of these external resources (FCI) always remains questionable. This paper analyzes the impact of the foreign capital inflow on GDP Growth in Pakistan during 1975-2004.