ECONOMIC DETERMINANTS OF FDI IN PAKISTAN

Hunain Zaki Department of Economics, University of Karachi Email: hunain_zaki@hotmail.com

ABSTRACT This study examines the various economic factors effecting on foreign direct investment (FDI) inflows into Pakistan during the study period ranging from 1990 to 2010. Data was analyzed using the classical linear regression model, ordinary least squares approach to estimate the various economic determinants effects on FDI inflows. Empirical results revealed that GDP, inflation rate and interest rate are the important economic determinants of FDI. To enhance more FDI into Pakistan the management authorities need to ensure economic and political stability, provision of infrastructure, peace and security, law and order situation, encourage domestic investment, curtail external debt, and equal importance may be given to appropriate monetary and fiscal policy. KEYWORDS: FDI, GDP, Inflation Rate and Interest Rate.