Abstract
In our study we have proven that FDI has crucial role in the growth of economy and the major source of the investment between developing and under developing countries, which is act as the bridge between saving-investment gaps.FDI is also way to increase the employment opportunities, economic growth and transfer of technology. In this study we have determined the different benefits of FDI for Pakistan .For this purpose we have taken the data from 1981 to 2011.we had collected the secondary data .the basic purpose of this study is to check the influence of cost of war against the terrorism. We had applied two basic techniques ARMA model and OLS regression. Our result is showing that there is negative relationship between FDI and cost of war against the terrorism.However,control variables namely, trade openness;incentives,market size and exchange rate stability have positive impact on the inflows of FDI.On the other side, inflation rate has negative impact on the inflows of all developing and under developing country.
Highlights
From the last few decades, many scholars have been written about the decisiveness of FDI and its contribution about the developed and under developed country
In this study we have determined the different benefits of FDI for Pakistan .For this purpose we have taken the data from 1981 to 2011.we had collected the secondary data .the basic purpose of this study is to check the influence of cost of war against the terrorism
We have discussed about the different determinates of FDI in our country and we have found the impact of these on the economy of Pakistan
Summary
From the last few decades, many scholars have been written about the decisiveness of FDI and its contribution about the developed and under developed country. 2011-2012 has shown that from the last 11 years, Pakistan is facing the cost of war near about 68.927 billion. Due to this cost the GDP and investment level has dropped from 23.5 % .As the results of this downfall there is a lot of problems like creating of job etc. Different researchers have proved that after the 1947, Pakistan is facing the FDI inflows due to political instability. Our study is trying to explore that unstable political environment is the reason that both domestic and foreign investors did not invest in Pakistan. Note: Pakistan’s Fiscal Year runs from 1st July till 30th June Source: Board of Investment Pakistan[6]
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