Abstract

Purpose: - this articles aim is to examine the factors of economic determinants in Pakistan. In this way, studies use the time series data from 1991 to 2009. Design: - in that way OLS regression model has used to check the coefficients and their effect of economics determinants on GDP for the short run and long run in Pakistan also Durbin Watson and Multi co linearity tests have applied to check the autocorrelation and multi co linearity respectively. Findings: - Empirical findings show that the credit to private sector (Financial Development), and Inflation show the positive but insignificant impact on GDP while trade openness show negative and significant effect of GDP. Foreign Direct Investment correlates positively with economic growth in Pakistan. Practical implication/ recommendations:- it is recommended that government should control the trade openness and inflation in order to increase the economic growth in the country. Originality value: - finance decision maker should make decision to increase the FDI in Pakistan. Key words: - Economic growth Factors, Inflation, GDP, Financial Development, trade openness. Paper type: - Empirical paper.

Conclusion
The determinants of economic growth plays very important role in the growth of a country. It is examined that both developed and under developing countries grows faster with these strong determinants as compared to those countries that are weak or without these determinants. The objective of this research article is to examine the effect of economic determinants in Pakistan from the year 1991 to 2009. OLS technique has been used to check the contribution of each independent determinant on GDP; also Durbin Watson and co linearity diagnostic tests have applied to check the autocorrelation and multi co linearity respectively. Empirical findings show that 1 unit change in financial development (FD) brings 120.4214 units positive change in GDP but insignificantly. This means that credit to private sector has low contribution in the growth of GDP, as that sectors may be under developed. Similarly 1 unit change in Inflation (INF) brings 53.44832 units positive change in GDP also insignificant. This indicates that up to certain limit, inflation effect positively on GDP but has low effect on GDP. The 1 unit change in foreign direct investment (FDI) brings 2106.132 units positive change in

GDP significantly. This shows that increasing the FDI enhance the GDP of Pakistan. The empirical findings about trade openness show the negative and significant effect on GDP; i.e. 1 unit change in trade openness (TR) brings -243.0894 units in GDP. That means imports are increase as compared to exports, which results in deficit of balance of payment. It is suggested to increase FDI and decrease TR to enhance the economic growth in Pakistan. Finance decision makers should focus on these determinants while making the decision about countrys progress. The data is from 1991 to 2009, so there is still limitation about the time duration. For long time, the results are not providing sufficient information. Despite of these four independent variables, there are also others variables which are very important for determining the GDP in Pakistan; e.g. real income per capita, foreign debt, human capital etc.

Introduction
Economically developed countries now they are able to decrease their level of poverty, forces on political and social organizations, safe natural environment, develop quality of life and attain stability in politics. (Barro, 1991) (Dollar, 2002) (Fajnzylber, 2002).