gender differential paper IJCRB

ijcrb.webs.com
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
Empirical Analysis of Macro Indicators Determining Foreign Direct
Investment in Pakistan
Muhammad Khyzer Bin Dost
Muhammad Waqas Younas
Hafiz Muhammad Arslan
M. Sarfraz Khan
Sidra Izzat
Hailey College of Commerce, University of the Punjab, Lahore, Pakistan.
JUNE 2011
VOL 3, NO 2
Abstract
Foreign direct investment inflows have remained low in the whole economic history of Pakistan
as compared to other developing countries. However a sharp increasing trend is seen by
economist in the first decade of 21 st century in Pakistan. The present study has examined the
variation in FDI inflows and effects of some macro indicators on FDI inflows in Pakistan. Two
models of multiple and simple regression analysis are employed on secondary time series data of
some macro indicators of Pakistani economy from 1985 to 2009 for analysis of impact of these
macro indicators on FDI inflows in Pakistan with the help of statistical analysis software SPSS
17.0 version. Results of the 1 st model show that high trade volume and better infrastructure have
positive impact on FDI inflows where as high inflation and high variations in exchange rate have
negative impact on FDI inflows. Results of 2 nd simple regression model show that a developed
stock market with high market capitalization value is a great attraction for FDI inflows in
Pakistan.
Keywords: FDI, Developing countries, Macro indicators, Infrastructure, Inflation, Exchange
rate, trade volume, Market capitalization
1. Introduction
World is becoming global village. Multinationals are investing all over the world and where
there is a little bit feasibility of investment MNCs are investing there. Before investing in any
country MNCs have to see some indicators because in real world there is only cost benefit
analysis in those indicators there come some social factors, political factors and economic
factors.
According to a study FDI inflows in US reached to $ 1.3 trillion in 2000 where as it was only
$200 billion in 1993. There happens a huge transfer of wealth from country to country and
region to region. In 21 st century the wealth is transferring from developed nations to developing
nations whose economic growth is very high. FDI inflows in developing countries were $132.9
billions in 1980 where as within a decade it has reached to $ 1438.48 bullions.
Pakistan a developing nation with high economic growth attracted huge amount of FDI in
different sectors. In previous decade the sector which has attracted huge amount of FDI in
Pakistan is telecom sector. FDI in telecom sector was $ 6.1 million in 2001 and reached to $
1824.3 million in 2005-06 a growth of 285.33%. The overall share of FDI reached to $5124.9
million in 2005-06 where as it was $484.7 million in 2001-02 a growth of 131.03%.
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 984