Pakistan Journal of Social Sciences (PJSS) Vol. 32, No. 1 (2012), pp.77-91 Globalization and Saving Behavior of Pakistan: An Empirical Analysis Muhammad Zahir Faridi, PhD Assistant Professor of Economics, Bahauddin Zakariya University, Multan, Pakistan. Email: zahirfaridi@bzu.edu.pk Ms. Asma Arif M. Phil Economics, Bahauddin Zakariya Universit, Multan, Pakistan. Abstract The paper attempts to investigate the Globalization and Saving Behavior of Pakistan by using the time series data from 1972 to 2010. This paper takes into account the importance of Globalization a core determinant of national, private and public savings. Ordinary Least Square method is used for empirical analysis. The analysis is made in two stages. In the I st stage descriptive statistics and correlation matrix are described. In 2 nd stage, Multivariate analysis explains saving behavior of Pakistan is determined by Globalization. The study concludes that the consumer price index, real interest rate, workers’ remittances have positive and significant influence on savings. Government deficit has marginally significant impact on savings while foreign direct investment have negative but significant impact on national and private savings. Public savings are directly and insignificantly influenced. Trade openness has positive and insignificant impact on national saving but it has negative and insignificant impact on private and public savings. Keeping in view the role of Globalization and saving behavior in Pakistan it is suggested that Government should provide enabling environment and fiscal incentives for enhancing the foreign direct investment. This will increase the savings in the country. For this purpose, the industrial and agricultural sectors of the country must be stable. Moreover, there is a need of creating an investment friendly business environment in Pakistan. Keywords: Workers’ remittances; Globalization; Deposit rate; Surplus labor; Trade Openness; Pakistan I. Introduction The issue of saving decision has short run and long run importance for macroeconomics analysis as concerned to Pakistan. Basically aggregate saving determines the size of capital stock and is major source of standard of living. From an economic point of view, savings can play a significant role in raising the employment, growth and creating economic stability. Moreover, saving can increase the aggregate demand by increasing the domestic consumption, level of investment, interest rates, exchange rate as well as the growth rate of the economy. Efficient utilization and