Relationship Between FDI, Terrorism and Economic Growth in Pakistan: Pre and Post 9/11 Analysis

Syed Jawad Hussain Shahzad, Muhammad Zakaria (), Mobeen Ur Rehman (), Tanveer Ahmed () and Bashir Ahmed Fida ()
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Muhammad Zakaria: COMSATS Institute of Information Technology
Mobeen Ur Rehman: COMSATS Institute of Information Technology
Tanveer Ahmed: COMSATS Institute of Information Technology
Bashir Ahmed Fida: Modern College of Business and Sciences

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2016, vol. 127, issue 1, No 9, 179-194

Abstract: Abstract The study examines cointegration and causal relationship between FDI, terrorism and economic growth in Pakistan using quarterly frequencies for the period 1988–2010. For empirical analysis data is divided into two sub-periods i.e. pre 9/11 (1988–2001) and post 9/11 (2002–2010) periods. The results show that long run cointegration holds between FDI, terrorism and economic growth. Granger causality results indicate that there is bidirectional short and long run causality between economic growth and FDI for both sub-samples. These findings are supported by variance decomposition and impulse response analysis. The findings suggest applicability of modernization theory to explain FDI and economic growth relationship. The results also reveal that terrorism has a deteriorating impact on FDI.

Keywords: FDI; Terrorism; Economic growth; Cointegration (search for similar items in EconPapers)
JEL-codes: C13 F21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (31)

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DOI: 10.1007/s11205-015-0950-5

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