Nexus among economic growth, institutional

transparency, foreign direct investments, and

governance quality: A Case of South Asian nations

A Thesis Submitted by:

Muhammad Haris Faryad, Behram Awan and Muhammad
Mashhood

In the partial fulfillment for the award of

Bachelor of Science in Accounting and Finance

Supervisor: PROF. Fiaz Ahmed Sulehri
Lahore School of Accountancy and Finance
Faculty of Management Sciences
 CHAPTER 1
INTRODUCTION
Economic growth is the process by which a country improves the economic, social and political
well-being of its citizens. It involves both quantitative and qualitative changes in a country’s
economy, including economic growth, poverty reduction, structural changes, social and human
development, institutional and policy improvements. All of these collectively determine the
growth of a country’s economic development. In short, economic development is a detailed
process focused on creating long term improvements in living standards, enabling individuals
and societies to achieve a higher quality of life. Furthermore, economic development is not
simply about increasing wealth but about creating a robust, diversified economy that improves
quality of life, ensures social equity, and promotes resilience against external shocks. It requires
a holistic approach, blending economic, social, and environmental priorities to achieve long-term
and sustainable advancements. (Mengistu & Adams, 2007; Yousaf et al., 2011)

Economic growth in developing countries is often characterized by growth in income levels,

improved infrastructure, and enhanced quality of life. Institutional quality and governance play a
crucial role in supporting sustainable growth, attracting foreign investment, and fostering a stable
environment for domestic and international businesses (Mengistu & Adams, 2007). Economic
development in Pakistan involves steady improvements in economic growth, standards of living,
and infrastructure, driven by various internal and external factors. Despite challenges, Pakistan’s
development journey has focused on building resilience and fostering sustainable growth across
key sectors to enhance economic stability and prosperity (Rehman et al., 2023). It is often driven
by factors like human capital, productivity, and improvements in education. These elements help
to enhance overall productivity, support sustainable growth, and increase the well-being of the
population, contributing to long-term prosperity and stability (Atif et al., 2020).

Economic development in South Asian countries has been influenced significantly by total debt
services and domestic savings. These components contribute to the region's ability to foster
sustained economic growth and enhance living standards (Rana & Barua, 2015).The economic
growth of South Asian developing countries has been characterized by a steady increase in the
production of goods and services, driven by a shift from agriculture to industry and services.
Over the years, these countries have focused on expanding domestic industries, improving
infrastructure, and promoting exports, which has gradually boosted their GDP. Economic
reforms and liberalization policies have opened these economies to international markets,
enabling growth in various sectors. Despite challenges such as income inequality and regional
disparities, South Asia’s economies have achieved substantial progress by tapping into a young
workforce, fostering entrepreneurship and foreign investment (Xin et al., 2024).

Foreign direct investment has played a critical role in driving economic growth in South Asian
developing countries. By bringing in capital, technology, and management expertise, foreign
investment has helped to modernize industries and boost productivity across various sectors,
especially in services and manufacturing. This influx of investment has created jobs, enhanced
export capacity, and stimulated local markets, fostering a more dynamic economic environment.
The entry of foreign firms has encouraged local businesses to innovate and compete globally,
further contributing to GDP growth. As countries liberalize their policies to attract more foreign
investors, they create pathways for sustained economic development and integration into global
markets (Xin et al., 2024). The relationship between foreign direct investment and economic
growth examines how international trade and external debt influences nexus in developing
countries, including India, Pakistan, and Bangladesh. Studies reveal that while foreign
investment and trade positively affect economic growth, the impact is statistically insignificant in
these contexts. The study also notes that high levels of external debt hinder long-term growth.
For South Asian developing countries, these insights suggest that while foreign investments can
contribute to economic growth, factors like trade openness and debt levels may shape its
effectiveness. Tailored strategies are essential to maximize foreign investment’s benefits in these
economies (Epor et al., 2024).

Foreign direct investment in South Asian developing countries identify the key economic factors
that attract foreign investment, such as GDP growth, export volume, population, import tariffs,
and price levels. The study finds that export volume is the strongest determinant of foreign
investment, suggesting that foreign investment’s impact on economic growth is amplified in
export-oriented sectors. This indicates that South Asian countries like Pakistan, Bangladesh and
India can benefit from foreign investment by focusing on sectors that drive exports rather than
just domestic consumption. It is recommended that these countries should shift its investment
policies to emphasize export-oriented industries, as this approach could maximize foreign
investment’s contribution to long-term economic growth (R. E. A. Khan & Nawaz, 2010).

The relationship between foreign direct investment and economic growth is closely tied to the
quality of governance. Effective governance, characterized by strong institutions, the rule of law,
and low corruption, creates an environment conducive to foreign investment, which in turn
drives economic growth. However, when governance quality is inadequate, foreign investment
may have little to no positive impact on economic growth. This highlights that high-quality
governance is critical for ensuring that foreign investment contributes meaningfully to long-term
economic development (Saidi & Ochi, 2023). Interestingly, in the case of SAARC economies,
governance quality was found not to mediate the relationship between foreign investments and
economic growth, suggesting that other factors may be at play in these countries. Nevertheless,
improving governance remains a key strategy to unlock the full potential of foreign investments
(Nasir et al., 2018).

In regions like Sub-Saharan Africa and China, the link between governance quality and
economic growth becomes even more apparent. In Sub-Saharan Africa, robust institutions and
effective governance frameworks are essential to attracting foreign direct investment and
ensuring that investments translate into sustainable growth (Beddim, 2017). Likewise, in China,
governance quality plays a crucial role in shaping regional economic outcomes, with improved
governance enhancing the ability to utilize human capital for long-term growth rather than
relying solely on fixed asset investment (Liu et al., 2018). Countries with better governance
structures are more likely to achieve sustained economic development, as strong institutions
provide the stability necessary to encourage both domestic and foreign investments
(Samarasinghe, 2018). For African nations struggling with poor governance, improving
governance quality is a key step toward reducing poverty and achieving sustainable economic
growth (Fayissa & Nsiah, 2013).

Alongside governance quality, institutional transparency is another crucial variable in driving

economic growth. Transparency within institutions fosters accountability, reduces corruption,
and enhances the efficiency of institutional processes, all of which contribute to economic
development. When institutional transparency is lacking, corruption and inefficiency can thrive,
undermining the potential for growth. By ensuring transparency, institutions can make decisions
that align with the public's best interests, minimize waste, and promote more equitable economic
outcomes. However, it is essential to carefully consider the type of information disclosed, as
certain sensitive details may not be appropriate for all stakeholders (Sumanjeet, 2015). This
highlights the importance of institutional transparency in improving governance and creating a
stable environment conducive to economic growth.

The role of transparency in promoting long-term economic growth is further evident in how it
enhances accountability and fosters trust among stakeholders, such as investors, businesses, and
the public. When institutions operate transparently, they ensure that policies, decisions, and
resource allocations are clear and accessible, which minimizes the risks of fraud and
mismanagement. This openness allows for more efficient resource use and creates a level playing
field for competition, promoting sustainable development (Diaz-Fuentes, 2008). In resource-rich
countries, where a lack of transparency can lead to the "resource curse," improving transparency
—particularly in resource management—can prevent inefficiencies and corruption, helping to
stabilize the economy and increase investor confidence. By breaking free from the resource
curse, these countries can establish a more predictable economic environment and foster
sustained economic development (Williams, 2011).
 CHAPTER 2
LITERATURE REVIEW
Foreign investment is considered as a substantial source of economic growth for developing
economies. Bouchoucha (2020) studies the relationship between foreign direct investment and
economic growth highlighting the function of governance in a panel of developing countries
from 2000 to 2019. Making use of an econometric analysis, the study investigates various other
factors such as foreign direct investment inflows, GDP growth rates and governance indicators
highlighting the fact that good governance encourages the expected positive link between
economic growth and foreign direct investment. This indicates that foreign investments benefit
countries with strong governance, as the findings suggest. It is suggested that, in order for
foreign direct investment to be effective long-term as a sustainable growth stimulant across
regions, local officials should give precedence to major institutional reform. Strengthening the
capacity of governance and developing economic strategies by incorporating governance factors
are essential to achieve optimized development outcomes.

It is of significant importance that the role of institutional quality be understood in causing

economic growth be understood in order to design better strategies for development. Using
Generalized Method of Moments Estimation in a dynamic panel data framework considering 104
countries, Hayat (2019) examines this relationship. This work evaluates the impact of
institutional quality on economic growth, both direct and indirect, exploiting Possible Output
data by means of a Structural Vectorial Auto regression for Colombia. The results suggest that at
least in Low and Middle Income Countries, where foreign direct investment is considered crucial
for growth, better institutional quality is significantly correlated with higher economic growth.
However, it was also found that in high-income countries, foreign direct investment can lead to
slower economic growth. This robustness is corroborated using a collection of institutional
quality indicators and endogeneity regression controls. These findings have important
implications for institutions that simply make the investment more attractive, which implies that
policy makers in countries with low or middle level income should focus on building up their
institutional quality in order to benefit from an increase in foreign direct investment which will
result in more growth.
The dynamics of foreign direct investment and its relation to domestic investment and economic
growth are both important issues for policymakers in developing countries. Using both Ordinary
Least Square and Fixed Effects estimations, Mengistu and Adams (2007) empirically explore the
relationships for 88 developing countries. Their results show a very strong and positive
connection between economic growth and foreign direct investment, with particularly influential
effects being specific to Asian countries. However, the study also points toward a net crowding-
out effect of foreign direct investment on domestic investment and hence suggests that foreign
direct investment contributes to growth mainly through efficiency improvements rather than
increasing local levels of investment. Moreover, the focus of the study is on the institutional
infrastructure of the country, with results showing its positive and significant correlation with
economic growth. Thus, this finding depicts how governance plays a very important role in
developing activities. The study postures a call to build institutional frameworks of a country
such that the maximum benefits will be achieved from foreign direct investment and valuable
information could be provided in order to enhance economic strategies in developing regions.

The link between foreign direct investment and economic growth is considered as highly
institution-sensitive. Brahim and Rachdi (2014) analyze this relationship on 19 countries within
the MENA region for the period from 1984 to 2011 by utilizing panel smooth transition
regression model for capturing the link between foreign direct investment and growth. Their
results yield evidence that foreign direct investment is conditionally neutral/effective with
regards to the institutional quality. This means robust, effectively functioning institutions are a
requirement for the countries taking advantage of foreign direct investment in order to expand
economic growth. The paper contributes to the established literature by clarifying the mediating
role of institutions on foreign direct investment and its effects, which addresses mixed findings
characterizing previous researches in this topic. This will force policymakers to stress the
institutional strengthening processes as necessary for full exploitation of benefits from foreign
direct investment, which subsequently will trigger sustainable economic development.

In order to promote international trade, it is important to understand the factors which affect the
decision to engage in export business by firms in developing countries. Jongwanich and
Kohpaiboon (2008) conduct a cross-section econometrics study on the factors that determine the
export engagement level of Thailand’s manufacturing industries and the role and export spillover
effect of multi-national corporations from 2000-2007, focusing on exploring the elements that
determine the market structure and how these elements influence the firm’s decision to opt for
exports. It explores certain specific key variables in their investigation such as the presence of
multi-national corporations, degree of export orientation, trade policies regime, and concludes
that these corporations tend to be more export-oriented than the local subsidiaries. The
investigation argues that they import the behavior of foreign trade into local firms by inducing
them to export, but only up to a certain degree as decided by the relevant trade policies. More
specifically, tariff barriers are such restrictive trade measures, imposed by a government on
imports, which discourages local firms to venture in to exporting activities and therefore
decrease spillover benefits. The authors suggest that, for this reason, the multi-national
corporations should be allowed to operate in open trade situations so as to gain maximum
advantages in the export sector. However, such open trade environments do not eliminate the
significance of neutral trade policies on the export performance of the countries.

Interconnectedness between governance quality, foreign direct investment, and economic growth
plays a vital role in understanding the dynamics of development in emerging economies. Saidi et
al. (2023) engage this triangular relationship by applying the panel vector autoregressive model
in their analysis of data from 102 developing countries between 1996 and 2014. The main
variables of the study for them included governance quality, foreign direct investment inflows,
and GDP growth. The results indicate that foreign direct investment inward spurts economic
growth very sharply. Interestingly, the results have proved that there is no impact of the
governance quality on economic growth or foreign direct investment in such settings. Then, the
authors used impulse response functions to see how governance shocks impact primary variables
while combining variance decomposition analyses that explain how these variables interact. This
study advances a growth-promotion role of foreign direct investment in its paper and then undoes
that by showing high governance is not necessarily in the cards for attracting foreign investments
or enhancing growth in developing countries. This research, in turn, offers desirable insights to
policymakers who would want to stimulate economic progress through foreign direct investment
strategies.

On account of irregular relationships between economic growth and overseas investment, the
process of governance quality has to be examined for a proper formulation of economic policy.
Using a dynamic threshold panel data approach, Labidi et al. (2024) explore the question in a
balanced panel of 54 African countries over the period 1996-2021. Using a global governance
index as a threshold variable, the study indicates that this positive effect of foreign investment on
economic growth becomes apparent only when the governance quality exceeds the rather
elevated threshold level, usually much higher than the current standards that dominate most
African countries. The study digs deeper to find out whether the governance indicators of various
aspects play any role in influencing foreign direct investment inflows. Its result-that not all the
governance aspects significantly shape the decisions of foreign investors-puts across a nuanced
understanding and calls for urgent improvement in governance quality in order to marshal
foreign direct investment effectively for further growth. The results of this study suggest that
policy-makers should focus on getting and sustaining the perceived governance threshold for the
benefits derived from foreign investment to be maximized. This will offer a pathway through
which sustainable development could be accrued to African economies, hence achieving a better
balance between equity and efficiency in their states' development process.

Understanding the relationship of the foreign direct investment and growth nexus with
governance is one way to strengthen economic growth in Africa. Adeleke (2014) utilizes panel
data techniques to examine both aggregate and disaggregate levels of governance in several
African countries, determining that a weak form of governance offsets good levels of economic
growth in many African countries. However, if the governance quality is viewed with foreign
direct investment in mind, then this clearly strengthens the outcomes on growth. This positive
complementarity between the governance quality and foreign direct investment is quite robust,
therefore holding well through various estimation techniques as well as other facets of
governance. The conclusion of such findings is that for African governments seeking more
foreign direct investment inflows and spurring economic growth, it is essential to develop greater
integrity in the governance framework. The policy-specific implications of these findings throw
more light on the relevance of governance in utilizing foreign investments towards sustainable
economic growth and thus contribute to helping policymakers enhance the investment climate
within the region.
The studies of the function of institutions in the nexus between foreign investments, trade, and
economic growth are considered important for understanding the dynamics that accompany
development in Sub-Saharan African. Using Structural Equation Modelling, Asamoah et al.
(2019) will be analyzing data from 34 Sub-Saharan African countries in the period of 1996-2016.
Their results showed that the foreign direct investment effect on development is negative, and
the relationship depends upon the institutions' quality because it increases after taking into
consideration institutional quality. Institutional quality has a positive relationship with trade
openness in the region, coupled with a favorable effect of institutions on economic development.
Institutional quality has no significant effect on foreign investment itself. Other factors like
human capital development, financial development, and resource rents are found to positively
affect economic growth in the region. They conclude that it is vital for improvement in the
quality of the institution, which after all shall also improve economic growth and development in
SSA, mainly targeted at reforms to strengthen the investment climate and trade dynamics within
the region.

The connection of governance quality, foreign direct investments and economic development is
critical for development of policies. Saidi and Ochi (2023) investigate this three-way relation in
102 developing countries by using data from 2000 to 2018 and applying the PTR model to
calculate the amount of governance quality required for foreign investment to have a significant
effect on economic growth. In fact, this research found such an interrelation curve to be
nonlinear among these variables. The connection between foreign direct investment and
economic growth is insignificant at a threshold level below −1.20 on the Good Governance
Index. When governance quality exceeds that threshold, foreign direct investment inflows
positively manifest economic development. Concurrently, this paper confirms that good
governance has been the essential ingredient for ensuring that the induction of foreign direct
investment has paved its benefits, and thus, some policy suggestions have been forwarded to
improve governance in developing countries. Accordingly, there is a need to attain adequate
governance standards for unlocking the potential of foreign investment as an engine for
economic growth, providing useful information for policy-makers to influence sustainable
development.
Foreign Direct Investment has a critical role in promoting economic growth, particularly in
economies that are developing where it contributes to capital accumulation, technology transfer,
and market expansion. Khan and Kim (1999) conducted a study focusing on Pakistan to assess
the continuing implications of foreign direct investment on the economy. Using data from the
1990s, they employed econometric models to analyze variables such as capital flow, trade
openness, and government policy impacts on foreign direct investment inflows. Their results
revealed that while foreign direct investment is a crucial component of economic stability, policy
inconsistencies and operational barriers hinder its potential benefits. Khan and Kim recommend
policy reforms to streamline foreign direct investment processes and suggest future research into
sector-specific impacts of foreign direct investment for a more nuanced policy formulation. The
study underscores the need for a stable and transparent policy framework to attract and sustain
foreign investment, particularly in challenging economic conditions.

The connection between Economic Policy Uncertainty and Renewable Energy Consumption is
becoming increasingly relevant, especially within emerging economies where sustainable energy
integration is essential for long-term growth. Zhang et al. (2021) investigate this nexus in Brazil,
Russia, India, China and South Africa or BRICS nations from 1997 to 2018, focusing on the
mediating roles of foreign direct investment and financial development. Using unit root tests by
Ng-Perron and Zivot-Andrews, the study confirms the stationarity of variables, followed by
Bayer-Hanck co-integration testing and linear and non-linear ARDL models to assess both long-
term and short-term shocks. Key variables analyzed include Economic Policy Uncertainty,
Renewable Energy Consumption, foreign direct investment, and financial development, with
results indicating a negative effect of Economic Policy Uncertainty on Renewable Energy
Consumption. However, foreign direct investment and financial development positively impact
Renewable Energy Consumption, suggesting that stable foreign direct investment inflows and
robust financial sector development can enhance renewable energy adoption. Directional
causality testing reveals a unidirectional causality from Economic Policy Uncertainty to
Renewable Energy Consumption, while a feedback relationship exists between foreign direct
investment and Renewable Energy Consumption as well as between financial development and
Renewable Energy Consumption. These findings suggest that policymakers in BRICS countries
should encourage foreign direct investment and financial sector improvements to support
renewable energy goals, while future research might explore sector-specific policies to mitigate
EPU effects on energy sustainability.

Good governance is widely regarded as essential for fostering economic growth by creating a
stable and transparent environment conducive to development. Khan et al. (2014) examine this
relationship within Pakistan, focusing on four key Worldwide Governance Indicators (WGI)
namely political stability, voice and accountability, control of corruption, and rule of law using
World Bank data. Adopting a quantitative research approach, the authors employ Spearman's rho
correlation and regression analysis to evaluate the effect of each governance indicator on
economic development, specifically GDP. Their findings reveal that among the indicators,
political stability has the most substantial positive impact on economic development, while the
other indicators, though significant, are comparatively less influential. The study suggests that
enhancing political stability could substantially boost Pakistan’s economic performance, and it
highlights the need for further governance reforms to optimize economic outcomes. Future
research could extend this analysis to include other governance factors or cross-country
comparisons for broader policy insights.

The increase in the demand for sustainable energy has resulted in an interest in renewable energy
as an alternative to environmental damage and energy limitations. Tariq et al. (2023) examine the
relationships between foreign direct investments, economic development, economic
globalization, and consumption of renewable energy across China’s Belt and Road Initiative
(BRI) countries by using the data from 2000 to 2020. The study utilizes Pooled Mean Group
Estimation and Autoregressive Distributed Lag technique to analyze the relationships. The
results reveal that while there is a favorable relationship between foreign investments and
renewable energy consumption in the long term, there is a negative relationship in the short term.
Policy-makers are suggested to promote economic integration to boost renewable energy
adoption. Future studies could explore the impact of foreign investments and economic
development on renewable energy

Foreign direct investment has a vital role in supporting economic development by providing
essential funding, technology transfer, and skill development, especially in developing
economies. Yousaf et al. (2011) investigate the effect of foreign direct investment on Pakistan’s
economic development from 1980 to 2009, assessing the data from World Bank indicators. The
study uses a production function framework and applies the Ordinary Least Squares model to
empirically assess the relationship between foreign direct investment and economic growth. Key
variables include employed labor force, domestic capital, and balance of trade, which
collectively represent the economy’s absorption capacity for foreign investment. Results
conclude that while foreign direct investment contributes to economic development favorably, its
effectiveness is contingent upon supportive domestic factors, such as a skilled labor force and a
balanced trade environment. The authors recommend enhancing domestic capacity to fully
leverage foreign direct investment for sustainable growth. Future research could examine sector-
specific foreign direct investment impacts to provide more targeted policy guidance for
maximizing economic benefits.

Foreign direct investment is important in improving any country's investment-to-GDP ratio and
increasing economic growth, mainly for resource-rich developing countries. Khan and Nawaz
(2010) analyzed the factors of foreign investment in Pakistan, while considering the critical
economic factors that affect the inflow of foreign investment in the country. The authors take
an empirical approach using data on GDP growth rate, export volume, population size, import
tariffs, and price index in order to identify the variables that most attract foreign investment.
Their result found that foreign direct investment is most attracted by export volume, meaning
that the country should focus more on export-oriented rather than emphasizing foreign direct
investment for domestic consumption. In terms of maximization Foreign Direct Investment, the
authors gave suggestions to change the investment policy in favor of the sectors that are going
to engage in export driving activities. More research on this topic might reveal further how
sector-specific policies might prove more beneficial in attracting sustainable foreign
investment in Pakistan.

Governance and transparency have been crucial factors of sustainable economic growth and
social well-being in the emerging economies. Asmat and Muzaffar (2023) analytically perform
an examination of governance and transparency practices in Pakistan, seeking to understand
how these two aspects affect the economy. It emphasizes examining the governance
framework, regulatory systems, and the role of transparency in fostering public trust and
resulting in an increase in investments. These findings indicate that besides the initiation of
governance reforms, it is still a long way from becoming totally transparent and accountable.
The authors emphasize on the need to further strengthen institutional frameworks and public
access to information to develop a more accountable and transparent governance system.
Future studies could then be focused on sector-specific impacts of governance reforms in order
to point out the most promising areas with the highest growth and reform potential.

Transparency and freedom of information are essential for promoting accountability and
reducing corruption in governance, which is especially critical in developing nations like
Pakistan. Mumtaz and Tariq (2021) examine Pakistan’s need for greater transparency, assessing
the challenges that hinder a fair and open political process. Using a qualitative analysis, the
authors explore public awareness of fundamental rights, such as food, education, and shelter, and
the limited understanding of rights related to transparency and accountability. Findings
emphasize that the lack of transparency allows corruption to persist, while public access to
information would likely increase efficiency among officials by enabling greater scrutiny. The
study suggests implementing policies that enhance public access to government records to foster
transparency and recommends ordinances aimed at awareness-building among the population.
Further research could analyze the effectiveness of recent reforms to better understand the
impact of transparency on Pakistan’s governance.

Foreign direct investment is often viewed as a synergist for economic development, though its
effectiveness varies across regions and economies. Awolusi and Adeyeye (2016) explore this
relationship in five African countries from 1980 till 2013, employing a modified growth model
that includes variables such as GDP, human capital, labor force, international technology
transfer, foreign direct investment, and gross capital formation. Using Ordinary Least Squares
Model and the Generalized Method of Moments for estimation, the authors find that while
foreign direct investment has a limited impact on economic growth in these African nations,
there are notable differences. For example, foreign direct investment increases South African
GDP by 0.12%, with relatively minor effects on growth in Egypt, Nigeria, and Kenya, and
foreign direct investment has the greatest positive effect among these countries. South African
policies and investment climate could be adopted as examples for other African countries that
seek to enhance the impact of foreign direct investment on growth, according to this study.
Future studies may focus on exploring the sector-specific implications of foreign investment and
develop targeted strategies for maximizing foreign investments into African economies.
The importance of institutional quality has been recognized as a major determinant of foreign
direct investment inflow to emerging or developing countries. Chen and Jiang (2023) study the
relationship in G20 countries utilizing data from 2005 to 2020, by using panel data to determine
the outcomes on foreign direct investment from institutional quality. By mediating effect
analysis, this paper finds that the improvement of institutional quality can not only promote trade
openness and the optimization of industrial structure, but also can increase investment in
technological innovation, which affects the inflow of foreign direct investment. Moreover, the
relationship is positively moderated by financial development and natural resource abundance,
but negatively influenced by higher tax levels. These results conclude that welfare institutions
increase foreign investment attraction and indicate financial development, and resource
management policies can improve this relationship further. Policy-makers are advised to use
long term investments and concentrate on trade-industrial policies considering resources, skills
and knowledge based on the robust institutions for sustainable FDI inflows.

Transparency and policies relating to access to information are crucial in enhancing the
performance institution by promoting accountability, transparency and trust. Honig et al. (2023)
analyzed data of 20,000 aid projects funded by 12 donor agencies across 183 countries to
examine the impact that “access to information” policies have on the performance of a project.
Using descriptive analysis and econometric analysis, the study analyzed variables such as
enforcement mechanisms, processes of independent appeals, and the presence of oversight
mechanisms. The results reveal that these policies improve the outcomes of a project,
particularly when they included independent appeals processes for information requests that
were denied, whereas policies without independent appeals processes showed no significant
impact on the performance of a project. Policy makers should emphasize the importance of
robust enforcement mechanisms, which would encourage the project staff to adjust their
behavior with respect to access to information appeals.

The elements of foreign investments play a vital role in enhancing the competitiveness of host
countries within a globalizing economy. Dunning (2013) examines the evolution of country-
specific and firm-specific factors that influence foreign investments utilizing data of the past two
decades. The study analyzes variables such as policies of the host country, global integration,
and competitive upgrading, and how these variables impact benefits received from foreign
investments. The research reveals that foreign direct investments can support the development of
local capabilities if it is aligned with macro-organizational policies. The study has suggested
policy makers to strategically change their policies by developing linkages that integrate
domestic competitiveness with global economic trends. Future research could potentially explore
the specific policy adjustments that are necessary in order to sustain competitive advantage in the
everchanging global market.

Transparency policies is considered to play a key role in enhancing the accountability and
legitimacy within global governance organizations. Donaldson and Kingsbury (2013) study the
increased presence and occurrence of formal transparency policies across various global
organizations, and why a shift towards open governance from traditional secrecy is being
observed, using data from the early 21st century and those institutions that are influenced by
national transparency laws, increased global authority, and accountability demands from states
and NGOs. The study analyzes variables such as policy adoption m transparency exceptions, and
institutional authority, revealing that transparency measures often enhance the trust of the public
but also can introduce complex political dynamics. The researchers suggest twelve hypotheses
regarding the implications of these measures for both state and non-state actors, advocating that
institutions should refine their practices of transparency in order to balance openness with
governance needs. Future research should examine the broader consequences of transparency for
global administrative law and power structures beyond the border of a nation.

Foreign direct investment plays an important role in influencing the growth of an economy, both
directly and indirectly. Almfraji and Almsafir (2014) conduct a comprehensive review of studies
from 1994 to 2012 which examines the relationship between foreign investments and economic
growth, and its impacts in various contexts. Using a comparative analysis approach, they analyze
variables that shape the link between foreign investment and economic growth such as levels of
human capital, development of financial markets, the harmony between domestic and foreign
investments, and open trade regimes. The researchers find that while foreign investment
generally influences economic growth positively, certain conditions such as inadequate human
capital or poorly developed financial market have an adverse effect, thereby negating the positive
effects of foreign investment. Policies that foster the development of human capital and open
trade environments should be maximized in order to obtain the maximum benefits of foreign
direct investment. The researchers suggest that future research should explore the role of
financial markets and investment policies in further enhancing the relationship between foreign
investment and growth across diverse economies.

The impact of foreign investment and other financial variables on economic growth plays a
critical role in developing economies, especially in emerging markets. Rehman et al. (2023)
investigate this relationship utilizing data of Pakistan from 1976 to 2019. By using an
asymmetric autoregressive distributed lag model, they study variables such as the positive and
negative effects in foreign investment, personal remittances, total reserves, gross savings, and
information and communication technology on economic growth. The study reveals that total
reserves have a negative and insignificant impact on growth, whereas remittances have a positive
impact on growth both in the long term and the short term. Foreign investment however shows a
significant detrimental impact on the economy of Pakistan. Information and communication
technology also negatively impacts growth, therefore suggesting that Pakistan does not possess
the ability to harness the economic benefits of digital advancements for growth. It is suggested
that the Pakistani government should develop policies that improve technical infrastructure in
order to maximize the benefits of foreign investment. Researchers also suggest that future
research should explore such policy mechanisms that would strengthen the impact of foreign
investment and information and communication technologies on economic growth in Pakistan.
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