Abstract

In many developing countries, foreign capital inflows are increasingly becoming a significant source to raise the pace of economic growth. This research paper investigates the impact of capital inflows from the Developed nations on the economic growth of Pakistan. Using time series data for 30 years from 1985 to 2013 we found that foreign direct investment and worker remittances lead positively towards economic growth on one side while on the other hand foreign aid and external debt negatively affects economic growth of Pakistan. This research paper also discuss a number of policy issues which arise from the result of the analysis relation to education, population growth rate, foreign direct investment, external debt, foreign aid and their proper utilization.