IMPACT OF GOVERNANCE ON FOREIGN DIRECT INVESTMENT IN CONTEXT OF PAKISTAN

Hayat khan, Business School of Guangxi University, Nanning, Guangxi, China
Muhammad Shabir Jan, Bacha Khan University Charsadda, Pakistan
Jincheng Hu, Guangxi University, Nanning, Guangxi, China
Itbar Khan, National University of Modern Languages-Islamabad Pakistan

Published in

JOURNAL OF INTERNATIONAL FINANCE AND ECONOMICS
Volume 19, Issue 1, p53-64, March 2019

ABSTRACT

This paper investigates the impact of governance of various determinants on FDI in Pakistan. The data had taken for the period of 1996 to 2012. VIF test was applied and no perfect multicollinearity was found among the independent variables. The multiple regression models results shows that F-Value indicates that overall model is significant and governance has impact on FDI. The relationship among VA, IR, ROL, CC, ER and GDP with FDI are positive and statistically significant which means with increase or decrease of various determinants of governance can bring positive change in FDI of the countries while relationship among PA and GE with FDI are negative and statistically significant which indicate that increase or decrease of these two determinants of governance can bring negative change in FDI. On the other hand, coefficient of RQ and INF on FDI is statistically insignificant which show no relationship of these determinants on FDI. It is concluded that in Pakistan the governance indices determinants are significant and that if change occurs in these variables it will change the FDI. This paper suggested that if the government promotes good governance it will attract more foreign investors, in turn FDI will increase significantly and the government can achieve full employment Growth and development.

Keywords

Foreign Direct Investment, Governance, Determinants of GI, Pearson Correlation, Regression analysis


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