Does foreign capital inflows really stimulate domestic investment: a case study of Pakistan
AbstractBy using system of equations and OLS estimation techniques, this paper examines the impact of foreign capital inflows on domestic investment in Pakistan. The system of equation shows that there is more than one-for-one relation between FDI and domestic investment, while the role of portfolio and loan in stimulating domestic investment is insignificant. The system of equation also shows that the impact of FDI on domestic investment is stronger than the role of domestic investment in attracting FDI. Similarly, OLS techniques confirmed that FDI complements domestic investment, particularly private investment. Contrary to other forms of capital inflows, FDI is positively and significantly correlated with domestic investment in different model specifications.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35737.
Date of creation: 2010
Date of revision: 2011
capital inflows; domestic investment; system of equations; Pakistan;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Adams, Samuel, 2009. "Foreign Direct investment, domestic investment, and economic growth in Sub-Saharan Africa," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 939-949, November.
- de Mello, Luiz R, Jr, 1999.
"Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data,"
Oxford Economic Papers,
Oxford University Press, vol. 51(1), pages 133-51, January.
- L.R. de Mello Jr., 1996. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Studies in Economics, Department of Economics, University of Kent 9615, Department of Economics, University of Kent.
- Barry P. Bosworth & Susan M. Collins, 1999. "Capital Flows to Developing Economies: Implications for Saving and Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 143-180.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.