Determinants of Foreign Direct Investment in services sector of Pakistan: An econometrics approach

Authors

Muhammad Zahid Awan, Gomal University, D. I. Khan, Pakistan
Khair uz Zaman, Gomal University, D. I. Khan, Pakistan
Bakhtiar Khan, Gomal University, D. I. Khan, Pakistan

Abstract

This study examines the key determinants of FDI inflows in Services sector of Pakistan, using time series data (quarterly) for the period of 1996Q1-2008Q4. To check the stationarity of the data, ADF test has been applied. Co-integration and Error Correction Model (ECM) is used for estimation of the data. This study found that Gross Domestic Fixed Capital formation (GDFCF), Inflation Rate(INF), Current Account Balance(CAB), Exchange Rate (ER), and Per Capita Income (PC) are main factors of FDI inflows in services sector of Pakistan. This study reveals that GDFCF, INF and PC are found statistically significant with positive signs. CAB and ER are also statistically significant with negative sign. While, trade openness (TO) is found statistically insignificant but with negative sign.

Keywords

Econometric model, Exchange rate, FDI, GDFCF, Inflation rate, Per capita income, Services sector

DOI

https://doi.org/10.54784/1990-6587.1251

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Recommended Citation

Awan, M. Z., Zaman, K., & Khan, B. (2010). Determinants of Foreign Direct Investment in services sector of Pakistan: An econometrics approach. Business Review, 5(2), 167-180. Retrieved from https://doi.org/10.54784/1990-6587.1251