All these three variables are used and transformed into real form through GDP deflator = 2000-01 which further transformed into natural logarithm form.
Besides foreign direct investment inflow to Pakistan and domestic investments variables, this study also used G… 'pa pdd chac-sb tc-bd bw hbr-20 hbss lpt-25' : 'hdn'"> However, application of VECM is a complex procedure and associated with cumbersome process [This study used the following variables to find the relationship between domestic investment and foreign direct investment in Pakistan:Besides domestic investment and foreign direct investment inflow variables, we use GDP variable in the model in order to avoid misspecification problem. Click on the arrows to change the translation direction.
The inflow of foreign direct investment from developed to developing countries increased during last few decades.
The time period of this study is 2006–2010. This study applies Phillips and Perron (PP) unit root test before applying econometric technique for empirical analysis which has been extensively applied in empirical literature.The aim of this study is to find causality between FDI and domestic investment and for this purpose Granger [This test is based on the following equation: The implication of FDI has crucial importance for developing economies like Pakistan because if it crowds out the domestic investment, it will squeeze the growth of the domestic capital stock; alternatively if it crowds in the domestic investment, it will expand the domestic investment.
This study aims to find dynamic interaction between domestic investment, foreign direct investment, and economic growth in Pakistan for the period 1976–2010.
Causal link can be found through Johansen cointegration test based vector error correction model (VECM) provided that cointegration prevails among the variables. Khan 29050, PakistanLNFDI = natural logarithm of foreign direct investment,LNDINV = natural logarithm of gross fixed capital formation (GFCF),LNGDP = natural logarithm of gross domestic product.
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Your feedback will be reviewed. Johansen cointegration approach applied to examine the long run relationship and Toda-Yamamoto causality approach is exercised to evaluate causal linkages.
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This is an important component of GDP because it provides an indicator of the future productive capacity of the economy. Thanks! 0 && stateHdr.searchDesk ? → investment
Phillips and Perron (PP) test is used to assess unit root in the concerned data series.
This nondebt foreign inflow eases the pressure on balance of payment distortion.
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Technological transfer from developed countries to developing countries occurs through FDI which paves the way for economic development in developing countries. Phillips and Perron (PP) test is used to assess unit root in the concerned data series.
Besides foreign direct investment inflow to Pakistan and domestic investments variables, this study also used GDP as a third variable in order to avoid misspecification problems in the model and also to know the interrelationship between the variables.
These roles of domestic investment motivate the foreign investors to reap the benefits of high return [Like other developing countries, Pakistan is also a recipient country of bulky FDI inflow since more than three decades. domestic investment From Longman Business Dictionary Related topics: Trade , Finance domestic investment doˌmestic inˈvestment [ uncountable ] FINANCE COMMERCE investment in your own country rather than abroad Beijing’s strategy is to expand economic development zones and improve the domestic investment climate.
Pakistan is also enjoying the foreign direct investment inflow during the past three to four decades. Improve your …
The data on FDI are taken from World Bank Data [First of all, PP unit root test is applied on all three data series in order to examine stationarity of the data.
Gross private domestic investment is the measure of physical investment used in computing GDP in the measurement of nations' economic activity. Numbers of lag selection criteria have been used in the literature, e.g., Akaike Information Criterion (AIK), Hannan-Quinn information Criterion (HQ), Sequential modified LR test statistics, Schwarz Information Criterion (SIC), Final Prediction Error (FPE).
Numbers of unit root tests are available in the literature to examine the stationarity in the data like Phillips and Perron test, Augmented Dickey Fuller test, NG-Perron test etc.