Major Determinants of Investment in Emerging Markets: A Case Study of Telecommunication Sector of Pakistan

Abstract

As early as 1980s telecommunication sector’s importance was recognized and assumed that advancement in telecom sector is a pre-requisite to economic development especially in developing countries of the world. This was started with various reforms like opening of boundaries for foreign direct investment, liberalization and privatization of the economies. This paper empirically investigates some of the major determinants of investment in telecommunication sector of Pakistan using time series data for the period from 1980 to 2006. Investment in telecommunication sector is taken as dependent variable while market Size, investment in financial sector, investment in education sector and foreign trade are the explanatory variables of the model. By using the multiple regression model in log-linear form we obtained the results (co-efficient given in the text) in which market size (0.31682), investment in education sector (0.25424) and foreign trade (0.39621) are playing significant role while the impact of investment in financial sector is insignificant. This study shows that investment in telecommunication sector increases whenever there is increase in trading activities as well as when the market size and investment in education sector is enhanced.

Keywords: Emerging markets, telecommunication sector, market size, investment in financial sector, Pakistan. JEL Classification: C13,C22,C87,F41,G15,L96,