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Foreign direct investment, cost of war and trade in Pakistan

Author

Listed:
  • Syed, Hasanat Shah
  • Hasnat, Hafsa
  • Li, Junjian

Abstract

This paper uses macro panel data and gravity model to examine the impact of FDI (Foreign Direct Investment) inflows from 20 trade partners and increasing war cost in Pakistan on import, export and trade deficit. The paper compares the effect and inflows of FDI in Pakistan before and after joining the war on terror in 2001. This research work confirms the complementary relationship between FDI and export and FDI and imports, however, the results of FDI impact on trade deficit is insignificant. Similarly, the impact of war cost on exports, imports and trade deficit is not significant.

Suggested Citation

  • Syed, Hasanat Shah & Hasnat, Hafsa & Li, Junjian, 2011. "Foreign direct investment, cost of war and trade in Pakistan," MPRA Paper 35598, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35598
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    File URL: https://mpra.ub.uni-muenchen.de/35598/1/MPRA_paper_35598.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Pakistan; gravity model; uncertainty; trade partners;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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