Economics at your fingertips  

Did reduction in corporate tax rate attract FDI in Pakistan?

Mian Sajid Nazir, Qaisar Hafeez and Salah U‐Din

International Journal of Finance & Economics, 2022, vol. 27, issue 2, 2256-2267

Abstract: Foreign direct investment (FDI) is a very important factor for economic growth because of its associated benefits such as advanced technology, employment, and economic development for the developing host countries. The factors of lower corporate tax rate, social peace, consistent energy supply, better infrastructure, skilled labor, political stability and business openness are very important for foreign investors. Therefore, this study investigates the impact of corporate tax reduction, terrorism, energy shortfall, availability of labor, infrastructure and degree of business openness on the FDI in Pakistan. Further, it compares democratic and autocratic regimes to evaluate their impact on attracting FDI in Pakistan. A vector error correction (VEC) model is used on the secondary data of the period 1989–2016. The results of the study show that corporate tax rate, terrorism, and energy shortfall have significant negative impact on FDI. The study results also confirm that autocratic period was more favorable to attract FDI providing openness to the economy when compared to democratic period. The findings of this study could be used by policy makers for future FDI policy of Pakistan.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2022-05-07
Handle: RePEc:wly:ijfiec:v:27:y:2022:i:2:p:2256-2267