IDEAS home Printed from https://ideas.repec.org/a/ani/irdjoe/v4y2022i4p647-657.html

Does Sustainable Development Promote Foreign Direct Investment in Pakistan? An ARDL Analysis

Author

Listed:
  • Muhammad Ramzan Sheikh

    (Associate Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

  • Mehjabeen Ali

    (Lecturer in Economics, Higher Education Department, Pakistan)

  • Rashid Ahmad

    (Assistant Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

  • Furrukh Bashir

    (Assistant Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

Abstract

Foreign direct investment (FDI) has become a cornerstone for the public and private sectors, especially in developing countries as it can enhance social overhead capital and employment opportunities. This study examines the association between sustainable development and foreign direct investment in Pakistan over the period 1972-2021 by using the ARDL estimation technique. The study has used various variables i.e., foreign direct investment, sustainable development index, tax, exchange rate, credit, broad money and trade. The findings reveal that exchange rate, credit, broad money and trade are positively related to foreign direct investment while the tax has a negative effect on FDI. The study also points out that there is a long-run association between sustainable development and FDI. The study recommends that policymakers may enhance foreign direct investment through sustainable development, taxes reduction, financial development, exchange rate stability and trade in Pakistan.

Suggested Citation

  • Muhammad Ramzan Sheikh & Mehjabeen Ali & Rashid Ahmad & Furrukh Bashir, 2022. "Does Sustainable Development Promote Foreign Direct Investment in Pakistan? An ARDL Analysis," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 4(4), pages 647-657, December.
    • Handle: RePEc:ani:irdjoe:v:4:y:2022:i:4:p:647-657
    DOI: 10.52131/joe.2022.0404.0105
    as

    Download full text from publisher

    File URL: https://journals.internationalrasd.org/index.php/joe/article/view/959/626
    Download Restriction: no
    File URL: https://journals.internationalrasd.org/index.php/joe/article/view/959
    Download Restriction: no
    File URL: https://libkey.io/10.52131/joe.2022.0404.0105?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. Lim Chia Yien & Hussin Abdullah & Muhammad Azam, 2017. "Monetary Policy Inclusive Growth: Empirical Evidence from Malaysia," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 225-235, January.
    2. Ang, James B., 2008. "Determinants of foreign direct investment in Malaysia," Journal of Policy Modeling, Elsevier, vol. 30(1), pages 185-189.
    3. Pica, Giovanni & Rodríguez Mora, José V., 2011. "Who's afraid of a globalized world? Foreign Direct Investments, local knowledge and allocation of talents," Journal of International Economics, Elsevier, vol. 85(1), pages 86-101, September.
    4. Orhan Gokmen, 2021. "The Relationship between Foreign Direct Investment and Economic Growth: A Case of Turkey," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(7), pages 1-85, June.
    5. 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.
    6. Abdouli, Mohamed & Hammami, Sami, 2017. "Investigating the causality links between environmental quality, foreign direct investment and economic growth in MENA countries," International Business Review, Elsevier, vol. 26(2), pages 264-278.
    7. Deng, Shengliang & Li, Yuan & Chen, Jinxian, 1997. "Evaluating foreign investment environment in China: A systematic approach," European Journal of Operational Research, Elsevier, vol. 100(1), pages 16-26, July.
    8. Daniel Chudnovsky & Andres Lopez & Gaston Rossi, 2008. "Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 645-677.
    9. Badamasi Sani Mohamed & Sule Ya'u Hayewa, 2020. "Impact of Trade Openness on Foreign Direct Investment in Sub Saharan Africa Countries," MSR Working Papers 3-2020, M&S Research Hub institute.
    10. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    Full references (including those not matched with items on IDEAS)

    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. Mohammad I. Elian & Nabeel Sawalha & Ahmed Bani-Mustafa, 2020. "Revisiting the FDI–Growth Nexus: ARDL Bound Test for BRICS Standalone Economies," Modern Applied Science, Canadian Center of Science and Education, vol. 14(6), pages 1-1, June.
    2. Udi Joshua & Festus V. Bekun & Samuel A. Sarkodie, 2020. "New Insight into the Causal Linkage between Economic Expansion, FDI, Coal consumption, Pollutant emissions and Urbanization in South Africa," Working Papers 20/011, European Xtramile Centre of African Studies (EXCAS).
    3. Alessia LO TURCO, 2005. "Integration Agreements, FDI and Structural Reforms. An Analysis of the Determinants of European Investment in Latin America," Working Papers 229, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Faik Bilgili & Nadide S. Tülüce & Ibrahim Doğan & H. Hilal Bağlıtas, 2016. "The causality between FDI and sector-specific production in Turkey: evidence from threshold cointegration with regime shifts," Applied Economics, Taylor & Francis Journals, vol. 48(5), pages 345-360, January.
    5. Muzurura, Joe, 2016. "Determinants of foreign direct investment (FDI) in Zimbabwe: What factors matter?," MPRA Paper 99873, University Library of Munich, Germany, revised 04 Jun 2016.
    6. Najeeb Muhammad Nasir & Mohammed Ziaur Rehman & Nasir Ali, 2017. "Foreign Direct Investment, Financial Development and Economic Growth," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 8(4), pages 228-239, October.
    7. Rajneesh Narula & André Pineli, 2019. "Improving the developmental impact of multinational enterprises: policy and research challenges," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(1), pages 1-24, March.
    8. Mohamed Elheddad & Mohga Bassim & Rizwan Ahmed, 2021. "FDI and economic growth in the GCC: does the oil sector matter?," Economics and Business Letters, Oviedo University Press, vol. 10(3), pages 178-190.
    9. Didenko Alexander & Egorova Tatiana, 2014. "Innovations as factor of absorptive capacity of fdi spillovers across regions of Russian Federation," Review of Business and Economics Studies, CyberLeninka;Федеральное государственное образовательное бюджетное учреждение высшего профессионального образования «Финансовый университет при Правительстве Российской Федерации» (Финансовый университет), issue 3, pages 75-85.
    10. Mohamed Abdouli & Anis Omri, 2021. "Exploring the Nexus Among FDI Inflows, Environmental Quality, Human Capital, and Economic Growth in the Mediterranean Region," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 788-810, June.
    11. Rudra P. Pradhan, Mak B. Arvin, & Mahendhiran Nair, Jay Mittal, & Neville R. Norman, 2017. "Telecommunications infrastructure and usage and the FDI–growth nexus: evidence from Asian-21 countries "Abstract: This paper examines causal relationships between telecommunications infrastructure and usage (TEL), foreign direct investment (FDI)," Department of Economics - Working Papers Series 2032, The University of Melbourne.
    12. Rajneesh Narula & André Pineli, 2017. "Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Don’t Know," Palgrave Studies in Impact Finance, in: Gianluigi Giorgioni (ed.), Development Finance, chapter 6, pages 147-188, Palgrave Macmillan.
    13. Omri, Anis & kahouli, Bassem, 2014. "The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region," Research in Economics, Elsevier, vol. 68(3), pages 257-263.
    14. Sarker, Bibhuti & Serieux, John, 2022. "Foreign-invested and domestic firm attributes and spillover effects: Evidence from Brazil," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    15. Hong, Seiwoong & Lee, Junyong & Oh, Frederick Dongchuhl & Shin, Donglim, 2023. "Religion and foreign direct investment," International Business Review, Elsevier, vol. 32(1).
    16. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    17. Alguacil, M. & Cuadros, A. & Orts, V., 2011. "Inward FDI and growth: The role of macroeconomic and institutional environment," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 481-496, May.
    18. Lee & Cheng-Wen & Mendy & Patrick A., 2025. "A Bivariate Causality Analysis on the Impact of Foreign Direct Investment Inflows on the Economic Growth of The Gambia," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 15(4), pages 1-2.
    19. Akhtaruzzaman, M. & Berg, Nathan & Hajzler, Christopher, 2017. "Expropriation risk and FDI in developing countries: Does return of capital dominate return on capital?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 84-107.
    20. Mohamed Abdouli & Sami Hammami, 2017. "The Impact of FDI Inflows and Environmental Quality on Economic Growth: an Empirical Study for the MENA Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 254-278, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:ani:irdjoe:v:4:y:2022:i:4:p:647-657. 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: Dr. Muhammad Abrar ul Haq (email available below). General contact details of provider: https://journals.internationalrasd.org/index.php/joe/index .

    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.