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Determinants of Inflow of Foreign Direct Investment (FDI) into Pakistan

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  • Ahmed, Tehseen
  • Malik, Saif Ullah

Abstract

The objective of this research paper is to examine the effects of various factors like violence, stock exchange performance and exchange rate on Foreign Direct Investment (FDI) inflow into Pakistan. For econometric analysis monthly secondary data ranging from 2003 to 2011 has been used. Regression and correlation are used as analytical tools for the empirical estimation. In addition, for time series data analysis Augmented Dickey Fuller test and Phillips-Perron test have been used. This study finds that the violence in the country and Karachi Stock Exchange- 100 Index are statistically significant factors with a positive sign. Moreover, the exchange rate has also been found to be statistically significant factor with negative sign. This study uses monthly time series data from 2003-2001, which enables a deeper understanding of FDI inflow in Pakistan. Results suggest that in order to enhance FDI inflow to a desirable level, the government should ensure the existence of a peaceful environment, efficient capital markets and a stable exchange rate in the country.

Suggested Citation

  • Ahmed, Tehseen & Malik, Saif Ullah, 2012. "Determinants of Inflow of Foreign Direct Investment (FDI) into Pakistan," MPRA Paper 54737, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54737
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    References listed on IDEAS

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    5. Zafar Mueen Nasir & Arshad Hassan, 2011. "Economic Freedom, Exchange Rates Stability and FDI in South Asia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 423-433.
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    7. Singh, Harinder & Kwang W. Jun, 1995. "Some new evidence on determinants of foreign direct investment in developing countries," Policy Research Working Paper Series 1531, The World Bank.
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    Cited by:

    1. Asaad, Zeravan, 2014. "The Economic determinants of foreign direct investment inward to Iraq for period (2004-2011)," MPRA Paper 103523, University Library of Munich, Germany, revised 04 Apr 2014.
    2. Kinza Yousfani & Farhana Khowaja & Ahmed Ali Yousfani, 2019. "The Commitment of Foreign Direct Investment and Foreign Portfolio Investment on the Monetary Development of Pakistan," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 5(4), pages 7-12, May.
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    4. Sahar Moazzeni & Sobhan Mostafayi Darmian & Lars Magnus Hvattum, 2023. "Multiple criteria decision making and robust optimization to design a development plan for small and medium-sized enterprises in the east of Iran," Operational Research, Springer, vol. 23(1), pages 1-32, March.

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    More about this item

    Keywords

    Foreign Direct Investment (FDI) inflow; Exchange Rate; Violence; Karachi Stock Exchange (KSE);
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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