Impact of Government Expenditure on the attraction of FDI in Pakistan
Nida Shah () and
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Yaseen Iqbal: Department of Management Sciences, IQRA University Karachi-75300, Pakistan.
International Journal of Economics and Empirical Research (IJEER), 2016, vol. 4, issue 4, 212-219
Purpose: This study attempts to investigate the impact of governmentâ€™s expenditure on the attraction of FDI in Pakistan by using annual time series data over the period 1972-2013. Governmentâ€™s health expenditure, development expenditure, defense expenditure and education expenditure are taken as independent variables and foreign direct investment (FDI) used as dependent variable. Methodology: Phillipsâ€“Perron test, cointegration test, Granger causality test, ordinary least square method has been used to identify the relationship. Findings: The result suggests that governmentâ€™s health, education and development expenditure have a significant positive long run relationship with the FDI, but the defense expenditure has a negative relationship with FDI. Recommendations: It is recommended tocreate a business friendly environment with investors the government should spend more on health, education and development sector, and especially concentrated on spending the right direction to achieve goals and objective.
Keywords: FDI; Government Expenditure; Development Expenditure; Pakistan (search for similar items in EconPapers)
JEL-codes: E10 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ijr:journl:v:4:y:2016:i:4:p:212-219
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