Domestic Investment in Pakistan: An Analysis Across Different Political Regimes

Muhammad Shabbir, Imrab Shaheen and Fahrat Qayyum
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Muhammad Shabbir: Department of Economics, University of Kotli Azad Jammu and Kashmir, Pakistan,
Imrab Shaheen: Department of Public Administration, University of Kotli Azad Jammu and Kashmir, Pakistan
Fahrat Qayyum: Department of Public Administration, University of Kotli Azad Jammu and Kashmir, Pakistan

International Journal of Economics and Financial Issues, 2020, vol. 10, issue 5, 344-351

Abstract: This study has been conducted to find out the impact of political and economic variables on domestic investment of Pakistan. For this purpose secondary data for 35 years has been collected according to the variables of this study. To analyze the data ARDL bound test procedure has been applied to assess long run relationshipand ARDL based ECM applied to check short run associationof political and economic variables on domestic investment whereas augmented dickey fuller test is applied to check stationary of data. Our findings declared that gross domestic product, foreign direct investment, foreign debt and domestic credit to private sector positively affect domestic investment in Pakistan whereas interest rate, foreign aid, inflation and non-democratic government have negative relation with domestic investment in long run. Dictatorial dummy and credit to private sector has insignificant influence in long run whereas in short run, non democratic dummy influences domestic investment significantly. Results are accordant with classical and Keynesian views. Overall it is concluded that domestic investment decisions have no concern to regime type but political and economic stability and law and order conditions are necessary to promote domestic investment.

Keywords: Political Regime; Gross Domestic Product; Foreign Debt; Domestic nvestment; Interest rate (search for similar items in EconPapers)
JEL-codes: A3 E62 O1 O2 O4 (search for similar items in EconPapers)
Date: 2020
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