Home and Host country determinants of financial investment flows to Pakistan

Irfan Khan (), Mazhar Mughal, Junaid Ahmed and Hongbo Cai
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Irfan Khan: School of Economics and Business Administration; China

Economics Bulletin, 2017, vol. 37, issue 1, 361-376

Abstract: This study examines the home and host-country economic, geographical and institutional factors that determine the volume of foreign direct investments (FDI) coming to Pakistan from the country's major investment partners. We find that host-country GDP, government spending, financial development, shared language and geographical distance play a significant role in driving FDI inflows. Regulatory environment and efficient and accountable government too are important. In contrast, infrastructure availability, current growth rates and occurrence of natural catastrophes do not appear to significantly influence FDI. Distance and linguistic affinity are stronger determinants of FDI than home or host GDP.

Keywords: FDI; Gravity model; Pakistan (search for similar items in EconPapers)
JEL-codes: F2 (search for similar items in EconPapers)
Date: 2017-02-22
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Citations: View citations in EconPapers (1)

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