IDEAS home Printed from https://ideas.repec.org/a/rnd/arjsds/v3y2012i2p59-68.html
   My bibliography  Save this article

The Impact of FDI on Economic Development of Pakistan

Author

Listed:
  • Muhammad Tahir Mahmood

Abstract

The foreign direct investment has made its position better as a bundle of benefits during the last three decades at the global level. The ultimate result of its benefits for the recipient countries is often sought in term of economic development. Such results do not appear in the same fashion in all recipient economies and so provide the space to investigate this nexus at country level. This study is an endeavor to examine empirically the impact of FDI on economic development of Pakistan. For this purpose, the time series data covering the period (1971-2009) were used. For data analysis, the bound testing approach to co integration within the framework of the Autoregressive Distributed Lag (ARDL) was utilized. The findings of the study supported the hypothesis of positive impact of FDI on economic development of Pakistan. The results also endorsed the views that the FDI is more effective than that of domestic investment.

Suggested Citation

  • Muhammad Tahir Mahmood, 2012. "The Impact of FDI on Economic Development of Pakistan," Journal of Social and Development Sciences, AMH International, vol. 3(2), pages 59-68.
    • Handle: RePEc:rnd:arjsds:v:3:y:2012:i:2:p:59-68
    DOI: 10.22610/jsds.v3i2.686
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jsds/article/view/686/686
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jsds/article/view/686
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jsds.v3i2.686?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zeshan Atique & Mohsin Hasnain Ahmad & Usman Azhar, 2004. "The Impact of FDI on Economic Growth under Foreign Trade Regimes: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 707-718.
    2. Laura Alfaro & Areendam Chanda & Sebnem Kalemli-Ozcan & Selin Sayek, 2006. "How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages," NBER Working Papers 12522, National Bureau of Economic Research, Inc.
    3. Zafar Iqbal & Ghulam Mustafa Zahid, 1998. "Macroeconomic Determinants of Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(2), pages 125-148.
    4. Kevin Honglin Zhang, 2001. "How does foreign direct investment affect economic growth in China?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(3), pages 679-693, November.
    5. Wang, Jian-Ye, 1990. "Growth, technology transfer, and the long-run theory of international capital movements," Journal of International Economics, Elsevier, vol. 29(3-4), pages 255-271, November.
    6. Robert Lensink & Oliver Morrissey, 2006. "Foreign Direct Investment: Flows, Volatility, and the Impact on Growth," Review of International Economics, Wiley Blackwell, vol. 14(3), pages 478-493, August.
    7. Khan, A.H. & Kim, Y.-H., 1999. "Foreign Direct Investment in Pakistan: Policy Issues and Operational Implications," Papers 66, Asian Development Bank.
    8. Lall, Sanjaya, 1980. "Vertical Inter-Firm Linkages in LDCs: An Empirical Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(3), pages 203-226, August.
    9. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    10. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    11. Helmut Reisen & Marcelo Soto, 2001. "Which Types of Capital Inflows Foster Developing‐Country Growth?," International Finance, Wiley Blackwell, vol. 4(1), pages 1-14.
    12. Baharumshah, Ahmad Zubaidi & Thanoon, Marwan Abdul-Malik, 2006. "Foreign capital flows and economic growth in East Asian countries," China Economic Review, Elsevier, vol. 17(1), pages 70-83.
    13. V. N. Balasubramanyam & M. Salisu & David Sapsford, 1999. "Foreign direct investment as an engine of growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(1), pages 27-40.
    14. World Bank, 2007. "World Development Indicators 2007," World Bank Publications - Books, The World Bank Group, number 8150.
    15. Mohsin Hasnain Ahmad & Shaista Alam & Mohammad Sabihuddin Butt, 2003. "Foreign Direct Investment, Exports, and Domestic Output in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 715-723.
    16. Ksenia Yudaeva & Konstantin Kozlov & Natalia Melentieva & Natalia Ponomareva, 2003. "Does foreign ownership matter?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 383-409, September.
    17. Jarita Duasa, 2007. "Determinants of Malaysian Trade Balance: An ARDL Bound Testing Approach," Global Economic Review, Taylor & Francis Journals, vol. 36(1), pages 89-102.
    18. Griffin, Keith, 1970. "Foreign Capital, Domestic Savings and Economic Development," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 32(2), pages 99-112, May.
    19. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth : The Role of Domestic Financial Sector," Finance Working Papers 22205, East Asian Bureau of Economic Research.
    20. Dutta, M., 2005. "China's industrial revolution: challenges for a macroeconomic agenda," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1169-1202, January.
    21. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    22. Shiva S. Makki & Agapi Somwaru, 2004. "Impact of Foreign Direct Investment and Trade on Economic Growth: Evidence from Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 795-801.
    23. Sharma Basu & Gani Azmat, 2004. "The Effects of Foreign Direct Investment on Human Development," Global Economy Journal, De Gruyter, vol. 4(2), pages 1-20, December.
    24. Dukhabandhu Sahoo & Maathai K. Mathiyazhagan, 2003. "Economic Growth In India: "Does Foreign Direct Investment Inflow Matter?"," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 48(02), pages 151-171.
    25. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ayesha Serfraz, 2018. "Analyzing Short-Run and Long-Run Causality between FDI Inflows, Labor Productivity and Education in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 5(1), pages 36-59.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Tahir Mahmood, 2012. "Does Human Capital Expedite Economic Development? The Case of Pakistan," Journal of Economics and Behavioral Studies, AMH International, vol. 4(3), pages 163-171.
    2. Muhammad Shahbaz & Mohammad Mafizur Rahman, 2012. "The Dynamic of Financial Development, Imports, Foreign Direct Investment and Economic Growth: Cointegration and Causality Analysis in Pakistan," Global Business Review, International Management Institute, vol. 13(2), pages 201-219, June.
    3. Baiashvili, Tamar & Gattini, Luca, 2020. "Impact of FDI on economic growth: The role of country income levels and institutional strength," EIB Working Papers 2020/02, European Investment Bank (EIB).
    4. Matija Rojec & Mark Knell, 2018. "Why Is There A Lack Of Evidence On Knowledge Spillovers From Foreign Direct Investment?," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 579-612, July.
    5. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    6. Teixeira, Aurora A.C. & Tavares-Lehmann, Ana Teresa, 2014. "Human capital intensity in technology-based firms located in Portugal: Does foreign ownership matter?," Research Policy, Elsevier, vol. 43(4), pages 737-748.
    7. Bhavesh Garg & Pravakar Sahoo, 2021. "DO DIFFERENT TYPES OF CAPITAL INFLOWS HAVE DIFFERENTIAL IMPACT ON OUTPUT? Evidence from Time series and Panel Analysis," IEG Working Papers 443, Institute of Economic Growth.
    8. Mohammad Mafizur Rahman & Muhammad Shahbaz, 2013. "Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 59-81, March.
    9. Vatthanamixay Chansomphou & Masaru Ichihashi, 2011. "Foreign aid, foreign direct investment and economic growth of Lao PDR," IDEC DP2 Series 1-2, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    10. Mohammad Sharif Karimi & Andrzej Cieslik, 2017. "Foreign Knowledge Spillovers and Total Factor Productivity Growth: Evidence from Four ASEAN Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(2), pages 267-299, Spring.
    11. Benzaim, Samia & Ftiti, Zied & Khedhaouria, Anis & Djermane, Rebai, 2023. "US foreign investments: Technology transfer, relative backwardness, and the productivity growth of host countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 275-295.
    12. Baccouche, Rafik & Bouoiyour, Jamal & Hatem, M’Henni & Mouley, Sami, 2008. "Dynamique des investissements, mutations sectorielles et convertibilité du compte de capital : impacts des mesures de libéralisation et expériences comparées Tunisie - Maroc [Dynamics of investment," MPRA Paper 38148, University Library of Munich, Germany.
    13. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics.
    14. Muhammad Shahbaz & Nuno Carlos leitão & Summaira Malik, 2011. "Foreign Direct Investment-Economic Growth Nexus: The Role of Domestic Financial Development in Portugal," Economics Bulletin, AccessEcon, vol. 31(4), pages 2824-2838.
    15. Bruno, Randolph Luca & Campos, Nauro F., 2013. "Reexamining the Conditional Effect of Foreign Direct Investment," IZA Discussion Papers 7458, Institute of Labor Economics (IZA).
    16. Shima’a Hanafy & Marcus Marktanner, 2019. "Sectoral FDI, absorptive capacity and economic growth – empirical evidence from Egyptian governorates," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(1), pages 57-81, January.
    17. Clark Don P. & Highfill Jannett & de Oliveira Campino Jonas & Rehman Scheherazade S., 2011. "FDI, Technology Spillovers, Growth, and Income Inequality: A Selective Survey," Global Economy Journal, De Gruyter, vol. 11(2), pages 1-44, July.
    18. Tiwari, Aviral & Mutascu, Mihai, 2010. "Economic growth and and FDI in ASIA: A panel data approach," MPRA Paper 28172, University Library of Munich, Germany.
    19. Subash Sasidharan, 2006. "Foreign Direct Investment and Technology Spillovers:Evidence from the Indian Manufacturing Sector," Working Papers id:448, eSocialSciences.
    20. Gulcin Elif Yucel, 2014. "FDI and Economic Growth: The Case of Baltic Countries," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(2), pages 115-134, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arjsds:v:3:y:2012:i:2:p:59-68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jsds .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.