The Impact of Quality of Institutions on Sectoral FDI
| Published date | 01 August 2018 |
| Date | 01 August 2018 |
| DOI | 10.1177/0015732517734757 |
| Author | Zeeshan Atiq,Mohsin Hasnain Ahmad,Qazi Masood Ahmed |
| Subject Matter | Articles |
The Impact of Quality of
Institutions on Sectoral FDI:
Evidence from Pakistan
Mohsin Hasnain Ahmad1
Qazi Masood Ahmed2
Zeeshan Atiq3
Abstract
This study addresses the issue whether institutional quality affects the sectoral
FDI both in short run and long run in Pakistan. By employing ARDL co-integration
technique, we analyse the impact of institutional quality on primary, manufactur-
ing and services sectors FDI in Pakistan. The findings suggest that institutional
quality matters in attracting FDI in manufacturing and services sectors in the
long run while institutional quality does not have a significant impact on FDI
in the primary sector. Moreover, results show that the impact of institutional
quality on these sectors is not apparent in short run. The main findings from this
research are that in long run institutional quality matters to attract substantial
FDI in manufacturing and services sector of Pakistan. Hence, policies aimed at
strengthening the institutional quality should be the priority for government.
JEL: F21, O43, C22
Keywords
Sectoral FDI, institutions, ARDL approach, Pakistan
Introduction
Efficient institutional structure provides conducive environment for economic
activities and attract investments in all sectors to contributing in the economic
growth (IMF, 2005). The quality of institutions in determining FDI has received a
Foreign Trade Review
53(3) 174–188
©2018 Indian Institute of
Foreign Trade
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0015732517734757
http://journals.sagepub.com/home/ftr
Article
1 Assistant Professor/Research Economist, Applied Economics Research Centre, University of Karachi,
Karachi, Pakistan.
2 Professor/Director Research, Institute of Business Administration (IBA), Karachi, Pakistan.
3 Assistant Professor, Department of Economics, University of Karachi, Karachi, Pakistan.
Corresponding author:
Mohsin Hasnain Ahmad, Applied Economics Research Centre, University of Karachi, Karachi, Pakistan.
E-mails: mohsin@aerc.edu.pk; mohsinku@hotmail.com
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