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The causal, linear and nonlinear nexus between sectoral FDI and infrastructure in Pakistan: Using a new global infrastructure index

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  • Rehman, Faheem Ur
  • Khan, Muhammad Asif
  • Khan, Muhammad Atif
  • Pervaiz, Khansa
  • Liaqat, Idrees

Abstract

This study explores the causal, linear, and nonlinear relationship between sectoral level foreign direct investment (FDI) inflows and infrastructure (transport, telecommunication, financial, and energy sectors) of Pakistan. Granger causality and autoregressive distributed lag (ARDL) approach to cointegration; suggest the presence of long-run bidirectional causality between infrastructure and FDI, while the nonlinear ARDL affirms the asymmetries in this connection. Results suggest that sectoral FDI inflows are important to enhance infrastructure in various sectors, both in the short and long-run. As improving infrastructure is vital to attracting FDI, results will be particularly useful to policymakers concerned about emerging markets.

Suggested Citation

  • Rehman, Faheem Ur & Khan, Muhammad Asif & Khan, Muhammad Atif & Pervaiz, Khansa & Liaqat, Idrees, 2020. "The causal, linear and nonlinear nexus between sectoral FDI and infrastructure in Pakistan: Using a new global infrastructure index," Research in International Business and Finance, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:riibaf:v:52:y:2020:i:c:s0275531919305367
    DOI: 10.1016/j.ribaf.2019.101129
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    More about this item

    Keywords

    Infrastructure; Sectoral FDI; ARDL; NARDL; Pakistan;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F2 - International Economics - - International Factor Movements and International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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