Macroeconomic Determinants of Employment Opportunities in Pakistan: The Role of Foreign Direct Investment, Economic Growth, Gross Capital Formation, and Population Growth
DOI:
https://doi.org/10.55737/trt/v-iv.246Keywords:
Foreign Direct Investment (FDI), Employment Opportunities, Economic Growth, Gross Capital Formation, Population Growth, Pakistan , ARDL, FMOLSAbstract
The current study investigates the impact of foreign direct investment (FDI), economic growth, gross capital formation, population growth and employment opportunities in Pakistan. This is the primary focus in exploring the short-term and long-term impacts of these macroeconomic variables on employment generation. The World Bank World Development Indicators (WDI) database is used for collecting time series data on an annual basis from 1990 to 2024. The stationarity properties of the variables are checked using the Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests to provide robustness of the empirical analysis. The ARDL bounds testing method is used to check if there is a long-run relationship between the variables and then to estimate LRC and SRC. In addition, the Fully Modified Ordinary Least Squares (FMOLS) estimator is used for robustness checking of the results of the ARDL. Based on the empirical results, it can be concluded that foreign direct investment has a positive influence on employment opportunities in Pakistan in terms of investment, productive capacity and labour demand. In contrast, the fast-growing population causes pressure on the labor market and negatively affects employment opportunities. Robustness analysis is used to check the robustness of the estimated results. The study therefore proposes the policy measures to attract sustainable FDI, increase the capital formation, maintain the stability of economic growth and shift towards effective population management policies for better job creation and long-term sustainable economic development in Pakistan
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