Dynamic Behavior of Investment, savings and Economic Growth in Pakistan

Abstract

Of the large number of factors which influence the growth rate of an economy , is the level of investment, which is n0ll11ally shown as a percentage of the Gross National Product, is amongst the most important. The amount of investment under taken is financed £1'0111 either domestic savings or foreign resource inflows. The movement of these three important variables, i.e. gross fixed investment, gross domestic savings, and foreign resource inflows together with the breakdown of investment and savings between the private and public sectors, tells us a great deal about the pace and the process by which the economy is trying to develop itself. There has emerged a plentiful literature on the detell11inants of private investment in developed countries, both for theoretical models (Nickell 1978, Artus and Muet 1986) and empirical results with different specifications (Abel 1980 and Artus and Muet 1984). However, stud ies on develop;ng countries are limited.