Hasanat Shah, Syed and Hasnat, Hafsa and Li, Junjiang (2010): Does foreign capital inflows really stimulate domestic investment: a case study of Pakistan.
Download (339kB) | Preview
By using system of equations and OLS estimation techniques, this paper examines the impact of foreign capital inflows on domestic investment in Pakistan. The system of equation shows that there is more than one-for-one relation between FDI and domestic investment, while the role of portfolio and loan in stimulating domestic investment is insignificant. The system of equation also shows that the impact of FDI on domestic investment is stronger than the role of domestic investment in attracting FDI. Similarly, OLS techniques confirmed that FDI complements domestic investment, particularly private investment. Contrary to other forms of capital inflows, FDI is positively and significantly correlated with domestic investment in different model specifications.
|Item Type:||MPRA Paper|
|Original Title:||Does foreign capital inflows really stimulate domestic investment: a case study of Pakistan|
|Keywords:||capital inflows, domestic investment, system of equations, Pakistan|
|Subjects:||F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
|Depositing User:||Hasanat Shah Syed|
|Date Deposited:||05. Jan 2012 20:00|
|Last Modified:||14. Feb 2013 17:52|
Admas, S. (2009), “Foreign Direct Investment, Domestic Investment, and Economic Growth in Sub-Saharan Africa” Journal of Policy Modeling, Vol. 31(6): 939-949.
Agosin, M., and Mayer, R. (2000). “Foreign Direct Investment: Does it Crowd in Domestic Investment?”, United Nations Conference on Trade and Development, Working Paper No. 146. Geneva, Switzerland.
Bornschier, V., and Chase-Dunn, C. (1985), “Transnational corporations and underdevelopment”, New York: Praeger
Bosworth, B. and Collins, S. (1999), “Capital Flows to Developing Economies: Implications for Saving and Investment”, Brookings Papers on Economic Activity: Vol. 0 (1): 143-69.
De Mello, L. R. (1999), “Foreign Direct Investment – Led Growth: Evidence from Time Series and Panel Data”, Oxford Economic Papers, Vol. 51: 133–151.
Desai, M. A., Fritz F. C. and Hines Jr. J. R (2005), “Foreign Direct Investment And The Domestic Capital Stock,”, American Economic Journal: Economic Policy, Vol. 92 (2): 33-38.
Devereux, P. M. and Freeman, H. (1995), “The Impact of Tax on Foreign Direct Investment: Empirical Evidence and the Implication for Tax Integration Schemes”, International Tax and Public Finance, Vol. 2: 85-106. Encarnation, D. J. and Wells, Jr. L.T. (1986), "Competitive Strategies In Global Industries: A View From Host Governments", in Porter, M.E. (Eds), Competition in Global Industries, Harvard Business School Press, Boston, MA.
Hasanat S. S., Bin, H. and Junjiang, L. (2011), “The Causality and Economic Impact of FDI inflows from Trade Partners in Pakistan”, MPRA Paper Series No. 35645.
Hecht, Y., Assaf, R. and Shinar, N. (2002), “Interactions Between Capital Inﬂows And Domestic Investment: International Panel Data," paper presented at the Pinhas Sapir Center Conference on FDI, Tel-Aviv University.
Hecht, Y., Razin, A. and Shinar, N. (2004), “Interactions between Capital Inflows and Domestic Investment: Israel and Developing Economies”, Israel Economic Review, Vol. 2(2): 1-14.
Keshava, S. (2008), “The Effect of FDI on India and Chinese Economy: A Comparative Analysis”, In Proceedings of the Second Singapore International Conference on Finance.
Kindleberger, C. P. (1969), “American Business Abroad”, New Haven: Yale University Press.
Mwilima, N. (2003), “Foreign Direct Investment Social Observatory Pilot Project”, Labour Resource and Research Institute.
Pradeep, A. (2000), “Savings, Investment and Growth In South Asia”, Indira Gandhi Institute of Development Research.
Razin, A. and Sadka, E. (2002), “Gains from FDI Inflows with Incomplete Information”, NBER Working Papers 9008, National Bureau of Economic Research, Inc