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

Abstract

This study provides a comprehensive analysis of the economic landscape in South Asia by examining key variables such as foreign direct investment (FDI), final consumption expenditure, inflation, and unemployment. Covering the period from 1991 to 2014, the research captures evolving economic trends across Pakistan, India, Bangladesh, and Sri Lanka. Utilizing data sourced from the World Bank, the study explores both the individual impacts of these variables and their collective influence on GDP per capita. This approach offers valuable insights into the complex dynamics shaping economic growth in the region, informing policymakers, economists, and stakeholders. The findings suggest that inflation exhibits a positive but statistically insignificant relationship with GDP per capita across these South Asian nations, indicating that while inflation may influence economic growth, its impact lacks statistical significance. However, the results highlight a significant positive relationship between FDI and GDP per capita, emphasizing the importance of policies aimed at attracting foreign investment to enhance economic development. Governments should implement measures to facilitate FDI inflows as a means to stimulate growth. Additionally, controlling inflation through effective monetary and fiscal policies is recommended to ensure macroeconomic stability and sustainable development. The study further underscores the role of GDP per capita growth in reducing unemployment, suggesting that economic expansion policies can contribute to job creation in the region. By focusing on FDI attraction, inflation control, and economic growth strategies, South Asian nations can enhance their development trajectories and foster long-term economic prosperity.