The Causal Relationship between Foreign Direct Investment, Imports and Exports in Pakistan

Authors

  • Muhammad Irfan Chani Assistant Professor and HOD Economics, The University of Lahore, Pakpattan Campus, Pakistan Author
  • Muhammad Azam PhD Scholar, Federal Urdu University, Islamabad, Pakistan Author
  • Akmal Younas MBA Student, National College of Business Administration and Economics (NCBA&E), Lahore, Pakistan Author

Keywords:

Foreign Trade, FDI, Imports, Exports, Trade Balance, Trade Liberalization

Abstract

This study evaluates the causal relationship between Foreign Direct Investment (FDI), imports and exports in

 

Pakistan by using the time series data from 1972to 2009. Ng. Parren Unit Root Test, Johansen Cointegration Test

 

and Granger Causality are used for empirical analysis. The results indicate that there is long run equilibrium

 

relationship among FDI, imports and exports. The estimates of causality test indicate that there is feedback

 

relationship between FDI and export performance in the country. Furthermore, the results are in favor of

 

bidirectional causality between imports and FDI. The inferences drawn from the study have stronger policy

 

implication for FDI.

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Published

2014-09-30

Issue

Vol. 3 No. 3 (2014)

Section

Articles

How to Cite

Chani, M. I. ., Azam, M. ., & Younas, A. . (2014). The Causal Relationship between Foreign Direct Investment, Imports and Exports in Pakistan. Bulletin of Business and Economics (BBE), 3(3), 142-149. https://bbejournal.com/BBE/article/view/211