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Sector Level Analysis of FDI-Growth Nexus: A Case Study of Pakistan

Author

Listed:
  • Somia Iram

    (Applied Economics Research Centre (AERC), University of Karachi, Karachi)

  • Muhammad Nishat

    (Institute of Business Administration (IBA), Karachi)

Abstract

The main objective of the study is to empirically investigate the differential impact of services and manufacturing Foreign Direct Investment (FDI) on economic growth over the period of 1972 to 2008. The study further examines the role of FDI in presence of macroeconomic instability and privatisation. For the investigation of long run, Autoregressive distributed lag model (ARDL) has been used. For short run results, we used Error correction method (ECM). Our empirical results show that FDI inflow in both, service sector as well as manufacturing is contributing to economic growth positively. But it is apparent from the results that contribution of services FDI to growth is greater than that of manufacturing FDI to growth. Furthermore, the results provide coherent and sound policy recommendations for further policy adaptation regarding sectors

Suggested Citation

  • Somia Iram & Muhammad Nishat, 2009. "Sector Level Analysis of FDI-Growth Nexus: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 875-882.
  • Handle: RePEc:pid:journl:v:48:y:2009:i:4:p:875-882
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    Cited by:

    1. M. Tahir Suleman & M. Talha Amin, 2015. "The Impact of Sectoral Foreign Direct Investment on Industrial Economic Growth of Pakistan," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 2(1), pages 102-123, March.

    More about this item

    Keywords

    Foreign Direct Investment; Economic Growth; Manufacturing Sector; Service Sector; Co-integration;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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