• editor.aipublications@gmail.com
  • Track Your Paper
  • Contact Us
  • ISSN: 2456-7817

International Journal Of Engineering, Business And Management(IJEBM)

Does Macroeconomic factors Impact on Foreign Direct Investment in emerging economies?(Pakistan)

Mr. Rizwan Ullah Khan , Ms. Sobia

International Journal of Engineering, Business And Management(IJEBM), Vol-3,Issue-3, May - June 2019, Pages 55-64 , 10.22161/ijebm.3.3.1

Download | Downloads : 6 | Total View : 1123


Foreign direct investment is essential for economic growth of a country. It acts as a promoter for the economic development of a country. Keeping this in mind, the objective of this study is to determine the effect of macroeconomic variables such as interest rate, real exchange rate,inflation rate and stock market on foreign direct investment in Pakistan. For this purpose,study used the authentic annual data for the period of 27 years i.e. from 1990-2016. We are use for analysis E-View software, The empirical analysis involved using the ADF test to check the stationary of the data.Results revealed that interest rate and exchange rate have significant negative effect on FDI and stock market index has negative and unsignificant effect on FDI while inflation rate has positive and significant effect on FDI.

real interest rate, real exchange rate, inflation rate, stock market index, Foreign direct investment.

[1] A, Moosa, Foreign Direct Investment: Theory, Evidence and Practice, Palgrave, New York, NY, USA, 2002.
[2] Adam, M. A., & Tweneboah, G. (2009). Foreign Direct Investment and Stock Market Development: Ghana's Evidence. International Research Journal of Finance and Economics, Iss. 26, 178-185.
[3] Ahn, Y.S., Adji, S.S. and Willett, T.D. (1998) the effect of inflation exchange rate policies on direct investment to developing countries. International Economic Journal. 12(1), 95-104.
[4] Akinboade, O.A., Siebrits, F.K. and Roussot, E.N. (2006) Foreign direct investment in South Africa, in Ajayi (ed.) Foreign direct investment in SubSaharan Africa – Origin, targets, impact and potential. Nairobi: African Economic Research Consortium. Applied Economics, 2(1): 29–59.
[5] Atlhukorala and Chand (2000). “Emerging Markets - A New Opportunity for Improving Global Portfolio
[6] B. A. Blonigen, “Firm-specific assets and the link between exchange rates and foreign direct investment,” The American Economic Review, vol. 87, no. 3, pp. 447–465, 1997.
[7] Babajide, A. A., & Lawal, A. I. (2016). Macroeconomic behaviour and FDI inflows in Nigeria: An application of the ARDL model. British Journal of Economics, Finance and Management Sciences, 11(1), 84-107.
[8] Balasubramanyam, V. N.; Mohammed. S. & Sapaford, D. (1996). FDI and Growth in EP and IS Countries. Economic Journal, 106:1, pp. 92– 105.
[9] Betz, T., & Kerner, A. (2016). The influence of interest: Real US interest rates and bilateral investment treaties. The Review of International Organizations, 11(4), 419-448.
[10] Calvo, M. B. & Sanchez-Robles, B. (2002). Foreign Direct Investment, Economic Freedom, and Economic Growth: New Evidence from Latin America. Universidad de Cartabria. (Economics Working Paper No. 4/03).
[11] Challenges” IMF Working Paper 07/209. Washington DC: International Monetary Fund.
[12] Cushman, D. O., & De Vita, G. (2017). Exchange rate regimes and FDI in developing countries: A propensity score matching approach. Journal of International Money and Finance, 77, 143-163.
[13] Dhakal, D., Nag, R., Pradhan, G. & Upadhyaya, P.K. (2010). Exchange rate volatility and foreign direct investment: Evidence from East Asian countries. International Business & Economics Research Journal, 9(7), 121-128.
[14] Durham, B. J. (2004). Absorptive Capacity and the Effects of Foreign Direct Investment and Equity Foreign Portfolio Investment on Economic Growth. European Economic Review, 48(2), 285-306.
[15] Ehimare, O. A. (2011). Foreign direct investment and its effect on the Nigerian economy. Business Intelligence Journal, 4(2), 253-261.
[16] Gottschalk, S. & Hall, S. (2008). Foreign direct investment and exchange rate uncertainty in South-East Asia. International Journal of Finance and Economics, 13, 349-359.
[17] Gupta, R. (2006). Benefits of diversification into emerging equity markets with changing correlations: An Australian perspective. International Review of Business Research Papers, 2(4), 22-38.
[18] I.A. Moosa, Foreign Direct Investment: Theory, Evidence and Practice, Palgrave, New York, NY, USA, 2002.
[19] J. J. Choi and B. N. Jeon, “Financial factors in foreign direct investments: a dynamic analysis of international data,” Research in International Business and Finance, vol. 21, no. 1, pp. 1–18, 2007.
[20] Khan, R. U. (2019). Relationship of HR Practices and Career Path: A Perspective of Accounting Studies. Jinnah Business Review, 7(1), 46-56. http://www.jbrc.pk/volumes/Article716.pdf
[21] Khan, R. U., & Ghufran, H. (2018). The Mediating Role of Perceived Organizational Support between Qualitative Job Insecurity, Organizational Citizenship Behaviour and Job Performance. J Entrepren Organiz Manag, 7(1), 1-7.
[22] Kiat, J. (2010). The effect of exchange rate and inflation on foreign direct investment and its relationship with economic growth in South Africa (Doctoral dissertation, University of Pretoria).
[23] Kogut, B./Singh, H., The Effect of National Culture on the Choice of Entry Mode, Journal of International Business Studies, 19, 3, 1988, pp. 411-432
[24] Kose, A. M., Prasad, E., Rogoff, S. K., & Wei, J. S. (2006). Financial Globalization: A Reappraisal. NBER Working Papers, 12484.
[25] Nagubadi, V.R. & Zhang, D. (2011). Bilateral foreign direct investment in forest industry between the U.S. and Canada. Forest Policy and Economics, 13, 338-344.
[26] Nath, K. Haryana (2009). Trade, Foreign Direct Investment and Growth: Evidence from Transition Economies. Comparative Economic Studies, 51, 20-50.
[27] Osinubi, T.S. & Amaghionyeodiwe, L.A. (2009). Foreign direct investment and exchange rate volatility in Nigeria. International Journal of Applied Econometrics and Quantitative Studies, 6(2), 83-116.
[28] Paramati, S. R., Mo, D., & Gupta, R. (2017). The effects of stock market growth and renewable energy use on CO2 emissions: Evidence from G20 countries. Energy Economics, 66, 360-371.
[29] Paramati, S. R., Ummalla, M., & Apergis, N. (2016). The effect of foreign direct investment and stock market growth on clean energy use across a panel of emerging market economies. Energy Economics, 56, 29-41.
[30] R. E. Caves, “Exchange rate movements and foreign direct investment in the united states,” in The Internationalization of US Markets, D. Audretsch and M. Claudon, Eds., New York University Press, New York, NY, USA, 1989.
[31] Richards, A. (2005). Big fish in small ponds: The trading behavior and price impact of foreign investors in Asian emerging equity markets. Journal of Financial and quantitative Analysis, 40(01), 1-27.
[32] Shukurov, S. (2016). Determinants of FDI in transition economies: the case of CIS countries. Journal of International and Global Economic Studies, 9(1), 75-94.
[33] Singh, A., & Weisse, A. B. (1998). Emerging Stock Markets, Portfolio Capital Flows and Long- trem Economic Growth: Micro and Macro Perspectives. World Development, 26(4), 607-622.
[34] Zhang and Felingham, (2001), “Stock Market Development in Sub-Saharan Africa: Critical Issues and Performance”, Financial Analysts Journal, Vol. 39 (5), 51-58.