Does Sustainable Development Promote Foreign Direct Investment in Pakistan? An ARDL Analysis

Muhammad Ramzan Sheikh (), Mehjabeen Ali (), Rashid Ahmad () and Furrukh Bashir ()
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Muhammad Ramzan Sheikh: Associate Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan
Mehjabeen Ali: Lecturer in Economics, Higher Education Department, Pakistan
Rashid Ahmad: Assistant Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan
Furrukh Bashir: Assistant Professor, School of Economics, Bahauddin Zakariya University, Multan, Pakistan

iRASD Journal of Economics, 2022, vol. 4, issue 4, 647-657

Abstract: Foreign direct investment (FDI) has become a cornerstone for the public and private sectors, especially in developing countries as it can enhance social overhead capital and employment opportunities. This study examines the association between sustainable development and foreign direct investment in Pakistan over the period 1972-2021 by using the ARDL estimation technique. The study has used various variables i.e., foreign direct investment, sustainable development index, tax, exchange rate, credit, broad money and trade. The findings reveal that exchange rate, credit, broad money and trade are positively related to foreign direct investment while the tax has a negative effect on FDI. The study also points out that there is a long-run association between sustainable development and FDI. The study recommends that policymakers may enhance foreign direct investment through sustainable development, taxes reduction, financial development, exchange rate stability and trade in Pakistan.

Keywords: Foreign direct investment; Sustainable development; Exchange rate; Broad money; Trade (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ani:irdjoe:v:4:y:2022:i:4:p:647-657

DOI: 10.52131/joe.2022.0404.0105

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