Analyzing the Impact of Foreign Capital Inflows and Political Economy on Economic Growth: An Application of Regime Switching Model

The goal of this study is to use the Markov Regime Model (MSM) evaluate impact three important FCIs and political economy on Pakistan’s economic growth. current research used quarterly data from 2000 2020. empirical results demonstrate that dictatorship contributes favorably high low growth regime economy, while election time positively expansion period adversely in recession times economy. Results confirmed external debt has a strong negative influence both low-growth regimes. Remittances, FDI, growth, other hand, have positive substantial link with This suggested effective fiscal monetary policies, as well suitable environment, should be provided so foreign investors would enticed invest Pakistan.