Political Instability and Foreign Direct Investment: Empirical Evidence from Pakistan

Abstract

The goal of this research was the most important factor in the Union between the FDI (foreign direct investment), GDP (gross domestic product), the foreign currency corporate credit rating, trade openness and tolerance of the regime in Pakistan and uses the time series data in this research from 1972 to 2012. Education, employment testing Augmented to determine the integration order the test of Dickey Fuller (ADF) use the results is integrated into an order data. Openness to trade and durability testing regime variable ARDL reached the limit of relationships discovered. GRANGER multivariate causality Study of using FDI and the main factors that determine the direction of causality between. Cointegrated reveal that Currency exchange rates, open trade and foreign direct investment in the power supply and the determinants of GDP durability are positively related to foreign direct investment, while the credit rating is negative result with the FDI foreign direct investment in Pakistan. Influencing factors of foreign direct investment intensity. Multivariate granger causality results indicates that GDP and the FDI, credit rating, exchange rate and regime durability have bidirectional causal relationship in long-run. The causality test results among multivariate, short run and long run imply with at different time frame there is need to implement some other policies for Pakistan. There is need to apply changes in the policies of government.