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The Causal Relationship between Foreign Direct Investment, Imports and Exports in Pakistan

Author

Listed:
  • Muhammad Irfan Chani

    (Assistant Professor and HOD Economics, The University of Lahore, Pakpattan Campus, Pakistan)

  • Muhammad Azam

    (PhD Scholar, Federal Urdu University, Islamabad, Pakistan)

  • Akmal Younas

    (M.B.A Student, National College of Business Administration and Economics (NCBA&E), Lahore, Pakistan)

Abstract

This study evaluates the causal relationship between Foreign Direct Investment (FDI), imports and exports in Pakistan by using the time series data from 1972to 2009. Ng. Parren Unit Root Test, Johansen Cointegration Test and Granger Causality are used for empirical analysis. The results indicate that there is long run equilibrium relationship among FDI, imports and exports. The estimates of causality test indicate that there is feedback relationship between FDI and export performance in the country. Furthermore, the results are in favor of bidirectional causality between imports and FDI. The inferences drawn from the study have stronger policy implication for FDI.

Suggested Citation

  • Muhammad Irfan Chani & Muhammad Azam & Akmal Younas, 2014. "The Causal Relationship between Foreign Direct Investment, Imports and Exports in Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 3(3), pages 142-149, September.
    • Handle: RePEc:rfh:bbejor:v:3:y:2014:i:3:p:142-149
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    References listed on IDEAS

    as
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