Abstract
The paper examines the impact of private investment on Pakistan's economic growth through a time series analysis for the period 1980-2017. Economic growth is represented with real per-capita GDP, private sector credit as an envoy of private investment (DCPS), and other variables are foreign direct investment, the discount rate, and the inflation rate. The stationarity properties of the data are investigated through Augmented Dicky Fuller test (ADF), and ARDL co-integration technique is used to estimate the equation. The findings show a significant and negative association between LDPS and real GDP: that 1% increase (or decrease) in domestic credit to private sector, on average, causes a 0.7% decrease (or increase) in real per-capita GDP in the long-run. It is also found that discount rate and GDP deflator have a negative impact on economic growth. The study concluded that private investment has negative impact on economic growth in Pakistan. It recommends to build a favourable economic environment, and incentivize FDI in Pakistan due to its positive and significant impact on GDP.
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