Master of Science in Economics

Faculty / School

Faculty of Business Administration (FBA)


Department of Economics

Date of Submission



Dr. Naeem Uz Zafar, Institute of Business Administration, Karachi

Project Type

MSECO Research Project

Access Type

Restricted Access


This study analyzes the relationship between Foreign Direct Investment (FDI) and exports by using 37 years’ time series data from 1976 to 2012. In this study Augmented Dickey Fuller (ADF) statistics, Engle and Granger (1987) residual based test, the Trace test and the Maximum Eigen value test, Hendry’s Error correction model, Granger Causality Analysis, CUSUM and CUSUM of square test and Chow Break point test have been used. Results suggest the significant positive effect of FDI on export in the long run as well as short run. Stability analysis suggests that estimates of long run relationship are stable in selected sample. On the basis of above findings it is suggested that Govt. should promote the FDI by providing trade benefits and tax free policy so the economy can boost and foreign investors are attract to invest to enhance export performance in Pakistan.


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