Check out how FDI inflow of one country effects the other country’s FDI inflow

Posted on

fdi-inflow-of-one-country

We empirically test whether neighbouring countries compete for and take the FDI inflows of each other. Using time series data for the years 1991-2013, the impact of the FDI inflows to the neighbouring countries of Pakistan (i.e., China, India, and Iran) on the FDI inflows to Pakistan was tested. We found that the FDI inflows to China has a negative impact on the FDI inflows to Pakistan while the FDI inflows to India has a positive impact on the FDI inflows to Pakistan, whereas the impact of FDI inflows to Iran on the FDI inflows to Pakistan is insignificant.

Further, trade openness and GDP growth were found to have a significant and positive impact on the FDI inflows to Pakistan. The study also found the existence of long run relationship between the FDI inflows to Pakistan, India, China and Iran. The empirical findings of the study suggest that policies made in isolation based on country specific FDI determinants will have less significant results as compared to policies made on the relative FDI attractiveness score. The ultimate impact of agglomeration of policies will helps in sustaining sustainable economic growth and development as well as improves largely society welfare of the neighbouring countries.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s