Exploring the Impact of Foreign Direct Investment, Consumption, Inflation, and Unemployment on GDP per Capita

Abstract

This study aims to provide a detailed understanding of the economic landscape in South Asia by examining the roles of key variables such as foreign direct investment, final consumption expenditure, inflation, and unemployment. Spanning from 1991 to 2014, the research captures the evolving trends and patterns in economic performance across the region. Through meticulous analysis of data sourced from the World Bank database, the study aims to uncover not only the individual impacts of these variables but also their interplay and collective influence on GDP per capita. This comprehensive approach enables a deeper exploration of the complex dynamics driving economic growth and prosperity in Pakistan, India, Bangladesh, and Sri Lanka, thereby offering valuable insights for policymakers, economists, and stakeholders invested in the region's development trajectory. The findings suggest that inflation exhibits a positive yet statistically insignificant relationship with GDP per capita across the South Asian countries of Pakistan, India, Bangladesh, and Sri Lanka. This implies that while inflation may exert some influence on economic growth, its impact is not statistically significant within the context of these nations. However, the results indicate that policies aimed at increasing foreign direct investment (FDI) could potentially lead to a positive and significant relationship with GDP per capita in these countries. Therefore, governments should focus on implementing measures that attract and facilitate FDI inflows to bolster economic growth and development. Additionally, controlling inflation through appropriate monetary and fiscal policies is recommended to ensure macroeconomic stability and sustain long-term growth. Moreover, the study underscores the importance of enhancing GDP per capita as a means to alleviate unemployment, suggesting that policies aimed at promoting economic expansion and prosperity can contribute to reducing unemployment rates in these South Asian nations.Top of Form