Page | 18 Vol. 2 No. 2, 2016 ISSN 2412-303X International Interdisciplinary Journal of Scholarly Research (IIJSR) Copyright © Scholarly Research Publisher An Analysis Of Determinants Of Private Investment In Pakistan Mahnaz Muhammad Ali Lecturer, department of Economics The Islamia University Bahawalpur, Pakistan Salma Shaheen Lecturer, department of Economics University of Gujrat,Gujrat, Pakistan Abstract Private investment is very important for the prosperity of any country. It pushed up the economic growth by solving the problems of unemployment, raising income and standard of living of people. This paper investigates the economic factors that affect Private Investment in Pakistan using the data from 1980-2011. Engle Granger Cointegration technique has been applied to analyze the long run and short run relationship with private investment. Results show that savings, credit and gross domestic product effect positively while inflation effect negatively private investment. Keywords: Private Investment, Pakistan, Cointegration, Error Correction Model. Introduction In recent years attention has been given to private investment as it boost up the economy and reduces poverty. Investment ensures the long run prosperity and progress of any country. It promotes production techniques, employment level, income, standard of living and production capacity. A country faces low level of economic growth, unemployment and poverty mostly because of unbalanced government expenditure, unfavorable weather conditions, low level of investment, political instability and many other factors existing in the economy. Private investment has a more favorable and stronger effect on growth than public investment. Reason is that private investment is more efficient and transparent as compare to public sector. But as a whole private investment play important role in boosting the economic growth of economy (Beddies 1999). Emphasis have been given on capital accumulation for economic growth (Solow1956).Capital formation has been focused to promote economic growth (Bakare 2011). For investment Pakistan is considered to be good due to its characteristics like expanding infrastructure, stability, predictability, cheap labor and wide areas of sectors for investment. So it is interested to know the factors that contribute to investment in different sectors of Pakistan. The objective of this study is to analyze the factors that contribute to private investment in Pakistan. For this purpose latest time series data for Pakistan’s economy for the period 1980-2011 has been used. Private investment is contributing significantly than public and general government investment in Pakistan. This can be seen by the tables given below consisting data of public and private investment. Some facts and figures about Pakistan’s economy are as follows.