Growth, FDI and Exports in Pakistan:A Co-integration Analysis

Ghulam Shabbir and Amjad Naveed

Abstract

Most of the empirical work has identified openness with trade to
analyze the impacts of outward-oriented policies in developing
countries. The exports promote both growth and foreign trade,
and foreign direct investment is one of the important factors of
foreign trade. Therefore, this study analyses the long run cointegrating
relationship among foreign direct investment,
exports and GDP. The result shows that long run relationship
exists between growth and exports but not with FDI. Therefore,
FDI is not a significant determinant of growth in the long run.
This study also analyses the causality among these variables in
the short-run, FDI is also not affecting the growth, but growth
affects both FDI and exports. Moreover, export and FDI are
also not significantly influencing each other in the short-run.