The Impact of Foreign Direct Investment (FDI) on Pakistan Exports: An Empirical Analysis (original) (raw)
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This study is a pioneering attempt to investigate the impact of foreign direct investment (FDI) on export performance in Pakistan by using the long annual time series data from the period 1974–2012 and by using more rigorous econometric techniques. Autoregressive distributed lag-bound testing cointegra-tion approach confirms the valid long-run relationship between considered variables. Results indicate the significant positive impact of FDI on real exports in long run as well as in short run. Results of Granger causality test, Toda and Yamamoto Modified Wald causality test and variance decomposition test confirm the bidirectional causal relationship between FDI and export performance in Pakistan. Results of rolling window analysis suggest that the coefficient of FDI in export model remains negative from 1983 to 1987, from 2001 to 2006 and in 2011. The coefficient of FDI in export model shows a positive coefficient in remaining years. It can be seen that FDI and real export are connected in complementary way in Pakistan. The policy makers should make policies that favour foreign investors so as to attract more FDI in Pakistan. It has been observed that a stable political and economic environment is desirable to attract more FDI in Pakistan.
Does Foreign Direct Investment Lead Export Performance in Pakistan?
This study is a pioneering attempt to investigate the impact of foreign direct investment (FDI) on export performance in Pakistan by using the long annual time series data from the period 1974–2012 and by using more rigorous econometric techniques. Autoregressive distributed lag-bound testing cointegration approach confirms the valid long-run relationship between considered variables. Results indicate the significant positive impact of FDI on real exports in long run as well as in short run. Results of Granger causality test, Toda and Yamamoto Modified Wald causality test and variance decomposition test confirm the bidirectional causal relationship between FDI and export performance in Pakistan. Results of rolling window analysis suggest that the coefficient of FDI in export model remains negative from 1983 to 1987, from 2001 to 2006 and in 2011. The coefficient of FDI in export model shows a positive coefficient in remaining years. It can be seen that FDI and real export are connected in complementary way in Pakistan. The policy makers should make policies that favour foreign investors so as to attract more FDI in Pakistan. It has been observed that a stable political and economic environment is desirable to attract more FDI in Pakistan.
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Objective of this paper was to evaluate the impact of foreign direct investment (FDI) on trade components (exports and imports) of Pakistan using annual data from 1975 to 2013. Engle and Granger two step cointegration method was used for conducting the analysis. This method was adopted because all the variables of interest were non stationary in level and stationary at first difference. Results provide evidence of long run cointegrating relationship as well as short run relationship between FDI and trade components. A rise in FDI causes both exports and imports to increase. Based on these empirical findings, we strongly recommend Government of Pakistan to focus on the strategy of investment liberalization as well as trade openness.
Sarhad Journal of Management Sciences, 2018
This paper identifies the impact of foreign direct investment (FDI), the real effective exchange rate and the total labor force on the exports of Pakistan. A double lag equation model for this investigation was developed in which FDI, exchange rate and labor force play a central role. The underlying conceptual framework of this paper reveals the positive impact of FDI and Labor force on exports of Pakistan while exchange rate shows negative impact. The distinguishing feature of this analysis is to encourage FDI and Effective Labor force which contribute to export development strategies of Pakistan. To estimate the long run and short run connection among the variables, yearly data for the period ranging from 1990-2016 have been analyzed by using Johanson Co-integration and Vector Error Correction model have been applied to determine the response of variables on each other. The result of this study shows that in the long run, FDI and Effective labor force play a vital role in the growth of Pakistan's exports while in the short run, the influence of exchange rate are very effective for the promotion of exports. It is recommended based on the study that Government should encourage FDI &TLF when developing the policy of trade.
Impact of foreign direct investment (FDI) on GDP: A Case study from Pakistan
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