Analyzing the Influence of Tax Revenue and FDI on Economic Growth in Pakistan

Abstract

This study investigates the influence of tax revenue and foreign direct investment on economic growth in the context of Pakistan, utilizing a quantitative approach and an explanatory research design. A review of the relevant literature reveals that the impact of these variables on economic growth has yielded mixed results. This study utilizes secondary data, specifically time series data, spanning from 2002 to 2022. We used analytical methods such as unit root tests and cointegration tests to assess the long-term relationships between the variables. The findings conclude that tax revenue and FDI are significant drivers of economic growth in Pakistan, and their importance cannot be undermined. This study recommends enhancing tax collection efficiency, broadening the tax base, and attracting more FDI through improved governance, policy reforms, and infrastructure development. These measures are crucial to providing a friendly and favorable environment for sustained economic growth and long-term development in the country.