Human Development Index and Global Development: A study of Pakistan

Abstract

A range of policies and initiatives, such as deregulation, free trade, social welfare, technological advancement, financial liberalization, flexible labor markets, increased foreign investment, privatization, reduced public spending, the adoption of ISO standards, laws safeguarding intellectual property rights, and more, were proposed in support of the idea of an open economy.

Our research issue for this study is whether or not international trade expansion and foreign direct investment (FDI) are useful instruments for promoting economic stability and development in Pakistan in the current global environment. The research's chosen data spans the years 1990–2015, which corresponded to the financial and economic liberalization of an open economy (globalization). The HDI was used as the mediator in the Ordinary Least Squares (OLS) analysis of the statistics, while the export and import, and real GDP growth rate, were the independent variables with the dependent variable, which is ratio of FDI to GDP. An empirical study was conducted using annual data spanning from 1990 to 2015. The HDI data was sourced from the Social Development report, and Pakistan review 2018-19, and data of FDI from Hand Book of Statistics of Pakistan Economy 2020-21. The real GDP growth rate data was obtained from World Development Indicator, while the remaining variables were chosen from international financial statistics. As expected, the FDI coefficient is high, but the actual GDP-to-ratio coefficient is negligible in Pakistan.