Nexuses Between FDI, Human Capital And Infrastructure Quality On Economic Growth: Empirical Analysis In South Asia

Noor-ul-ain Zafar

Abstract

About the world’s 40% population belong to the South Asia region which economy is gearing to rise through 7.2% in 2021 and 4.4% in 2022 which is mounting since significant lows in 2020 and bring into mark the region to a pathway of retrieval. The basic objective of this study is to regulate the nexus of Foreign Direct Investment (FDI), Human Capital, and Infrastructure Quality with economic development in South Asian Countries: Bhutan, India, Srilanka, Pakistan, and Bangladesh. To examine the impact of FDI, human capital, and infrastructure quality, the ARDL test with 2 and 1 lag is used to evaluate the impact of 25-year data extracted from WDI (World Development Indicator) of these countries. The results indicated that FDI and infrastructure quality negatively affect the economic growth of these South Asian countries whereas Human Capital has a positive impact on economic growth. The GDP is used as a proxy to amount the economic growth in the model. Interestingly this study results suggest investment in Human Capital to improve the quality of life which may contribute towards the positive economic growth of Bhutan, India, Srilanka, Pakistan, and Bangladesh. This study also suggests that the government of these countries should devise time effective policies for the development of human capital. The researchers may study comparative analysis of developed and developing countries to further examine the impact of FDI.