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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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    Cited by:

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    3. Li, Shi & Zhao, Long, 2021. "Bilateral investment treaties and foreign direct investment: Evidence from emerging market firms," Research in International Business and Finance, Elsevier, vol. 58(C).
    4. Kayode David Kolawole & Micheal Adebayo Ajayi & Abdulkareem Alhassan & Festus Victor Bekun & Gizem Uzuner, 2022. "Sustainable Energy Supply, Finance, and Domestic Investment Nexus in West Africa," Sustainability, MDPI, vol. 14(19), pages 1-11, September.
    5. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    6. Usman Akbar & Akash Kumar & Hameed Khan & Muhammad Asif Khan & Khansa Parvaiz & Judit Oláh, 2020. "Trade-Offs in Competitive Transport Operations," Economies, MDPI, vol. 8(3), pages 1-19, July.
    7. Kamalova Mariyakhan & Elyas Abdulahi Mohamued & Muhammad Asif Khan & József Popp & Judit Oláh, 2020. "Does the Level of Absorptive Capacity Matter for Carbon Intensity? Evidence from the USA and China," Energies, MDPI, vol. 13(2), pages 1-18, January.
    8. Faheem Ur Rehman & József Popp & Ejaz Ahmad & Muhammad Asif Khan & Zoltán Lakner, 2021. "Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach," Sustainability, MDPI, vol. 13(24), pages 1-18, December.
    9. Yixing Sun & Mingyang Zhang & Yicheng Zhu, 2023. "Do Foreign Direct Investment Inflows in the Producer Service Sector Promote Green Total Factor Productivity? Evidence from China," Sustainability, MDPI, vol. 15(14), pages 1-19, July.
    10. Muhammad Atif Khan & Muhammad Asif Khan & Kishwar Ali & József Popp & Judit Oláh, 2020. "Natural Resource Rent and Finance: The Moderation Role of Institutions," Sustainability, MDPI, vol. 12(9), pages 1-23, May.

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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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