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Impact of Government Expenditure on the attraction of FDI in Pakistan

Author

Listed:
  • Nida Shah

    (Department of Management Sciences, IQRA University Karachi-75300, Pakistan.)

  • Yaseen Iqbal

    (Department of Management Sciences, IQRA University Karachi-75300, Pakistan.)

Abstract

Purpose: This study attempts to investigate the impact of government’s expenditure on the attraction of FDI in Pakistan by using annual time series data over the period 1972-2013. Government’s health expenditure, development expenditure, defense expenditure and education expenditure are taken as independent variables and foreign direct investment (FDI) used as dependent variable. Methodology: Phillips–Perron test, cointegration test, Granger causality test, ordinary least square method has been used to identify the relationship. Findings: The result suggests that government’s health, education and development expenditure have a significant positive long run relationship with the FDI, but the defense expenditure has a negative relationship with FDI. Recommendations: It is recommended tocreate a business friendly environment with investors the government should spend more on health, education and development sector, and especially concentrated on spending the right direction to achieve goals and objective.

Suggested Citation

  • Nida Shah & Yaseen Iqbal, 2016. "Impact of Government Expenditure on the attraction of FDI in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(4), pages 212-219, April.
    • Handle: RePEc:ijr:journl:v:4:y:2016:i:4:p:212-219
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    Citations

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    Cited by:

    1. Mariam Camarero & Sergi Moliner & Cecilio Tamarit, 2021. "Is there a euro effect in the drivers of US FDI? New evidence using Bayesian model averaging techniques," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 881-926, November.
    2. Mariam Camarero & Sergi Moliner & Cecilio Tamarit, 2020. "Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model," Working Papers 2007, Department of Applied Economics II, Universidad de Valencia.
    3. Camarero, Mariam & Moliner, Sergi & Tamarit, Cecilio, 2021. "Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging," Japan and the World Economy, Elsevier, vol. 57(C).

    More about this item

    Keywords

    FDI; Government Expenditure; Development Expenditure; Pakistan;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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