Mohsin Hasnain Ahmad

The nexus between sectoral FDI and institutional quality: empirical evidence from Pakistan

ABSTRACT This study investigates short- and long-run bidirectional causality between institutional quality and sectoral-level FDI in Pakistan by using the ARDL technique. The results confirm that long-run bidirectional causality exists between institutional quality and aggregate FDI. The in-depth sectoral-level FDI analysis substantiates the presence of long-run bidirectional causality between institutional quality and FDI in services and manufacturing sectors, while no long-run causality is observed between institutional quality and FDI inflows in primary sector. Furthermore, the results in the study reveal short-run bidirectional causality only between institutional quality and manufacturing FDI and report insignificant short-run causal link between institutional quality and FDI in primary and services sectors. The overall findings of the study suggest that in the long-run institutional quality attract FDI and FDI inflows, particularly to manufacturing and services sectors, significantly enhance the quality of institutions in Pakistan.

Does the Institutional Quality Matter to Attract the Foreign Direct Investment? An Empirical Investigation for Pakistan

This study investigates the role of the institutions as a determinant of foreign direct investment (FDI) in the case of Pakistan by applying the autoregressive distributed lag (ARDL) cointegration technique. The results demonstrate that the institutional quality exerts long-run impact in determining the FDI inflows. The findings suggest that institutional quality is an important determinant of the FDI in Pakistan. The joint impact of institutional quality and trade openness is also significant and positively contribute to attract FDI in the short run as well as in the long run. The findings strongly support the hypothesis that simultaneous implementation of policy mix, that is, reducing trade barriers and improvement in institutional quality, play significant role in attracting FDI in a developing country like Pakistan.

The Impact of Quality of Institutions on Sectoral FDI

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, manufacturing 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

The Effects of the Human Cost of Terror on National Income, Private Consumption and Investment in Pakistan

The main focus of this article is to investigate the short- and long-run causal effects of human cost of terror on gross domestic product (GDP), private consumption and private investment in Pakistan by using autoregressive distributed lag techniques. The results confirm the long-run association between the human cost of terror, GDP, private consumption and private investment and suggest that the human cost of terror adversely affects GDP and private investment, and positively influences private consumption in the long run. Furthermore, the results in the study reveal that the human cost of terror negatively affect GDP and private investment and increases private consumption in the short run. The overall findings of the article suggest that the human cost of terror drags the economy down, discourages private investment and distorts the pattern of private consumption in Pakistan.