RELATIONSHIP BETWEEN SAVINGS, TRADE FACILITATION, GOVERNANCE, AND INVESTMENT IN PAKISTAN

Abstract

Saving and investment are highly debated issues in the literature of economics. There are several determinants of investment, where saving is considered one of the most imperative contributing factors to investment in Pakistan. It is argued that Good quality of governance, trade facilitation, and a higher level of national saving increases investment in the country. To test the argument, the current study analyzes the association between, national savings, trade facilitation, good governance, foreign savings, and investments in the case of Pakistan’s economy. To examine the relationship, the authors use OLS and to specify it better finally, the authors have employed the Auto Regressive Distributive lag (ARDL) method. The results of the study show, that Pakistan’s total investment responds positively to the growth in national savings and foreign savings. The paper found that there exists a substantial relationship concerning trade facilitation and investment in Pakistan and the study accomplishes that in order to increase investment in Pakistan, trade facilitation and managing monetary policy can play an important role and the government should focus on trade facilitation and quality of governance to ensure the growth of investment in Pakistan, which has the potential to develop opportunities of employment in Pakistan. Keywords: Investment, Saving, trade facilitation, and Monetary policy.