The causal, linear and nonlinear nexus between sectoral FDI and infrastructure in Pakistan: Using a new global infrastructure index

Faheem Ur Rehman, Muhammad Asif Khan, Muhammad Atif Khan, Khansa Pervaiz and Idrees Liaqat

Research in International Business and Finance, 2020, vol. 52, issue C

Abstract: This study explores the causal, linear, and nonlinear relationship between sectoral level foreign direct investment (FDI) inflows and infrastructure (transport, telecommunication, financial, and energy sectors) of Pakistan. Granger causality and autoregressive distributed lag (ARDL) approach to cointegration; suggest the presence of long-run bidirectional causality between infrastructure and FDI, while the nonlinear ARDL affirms the asymmetries in this connection. Results suggest that sectoral FDI inflows are important to enhance infrastructure in various sectors, both in the short and long-run. As improving infrastructure is vital to attracting FDI, results will be particularly useful to policymakers concerned about emerging markets.

Keywords: Infrastructure; Sectoral FDI; ARDL; NARDL; Pakistan (search for similar items in EconPapers)
JEL-codes: C22 F2 F21 H5 H54 O17 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:52:y:2020:i:c:s0275531919305367

DOI: 10.1016/j.ribaf.2019.101129

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