Institutional determinants of inward FDI : evidence from Pakistan

Uddin, M; Chowdhury, A; Zafar, S; Shafique, S; Liu, JL

Abstract

FDI has been growing at a spectacular pace all over the world and emerging countries have been successful in attracting more FDI compared to developed countries. Institutional factors are becoming more important as determinants of inward FDI for emerging markets.
However, research in this area is inadequate and also inconsistent in terms of findings. In this paper, we have examined the institutional determinants of Pakistani FDI inflows and also examined the relative importance of those factors. The paper has found that certain institutional determinants such as size of the government, legal structure and strong property rights, freedom to trade and civil liberty have strong positive effect on FDI inflows. Among the institutional variables, regulation has been found to be most important to influence inward FDI flow to Pakistan. The paper has also found evidence that there was a structural break in FDI flows in Pakistan which coincides with market liberalisation programme in
early 1990s. This confirms the effectiveness of conducive institutional environment to attract foreign investment. Moreover, we have found that military government is more successful in attracting FDI compared to democratic government in Pakistan.

Citation

Uddin, M., Chowdhury, A., Zafar, S., Shafique, S., & Liu, J. (2019). Institutional determinants of inward FDI : evidence from Pakistan. International Business Review, 28(2), 344-358. https://doi.org/10.1016/j.ibusrev.2018.10.006

• Journal Article Type: Article
• Acceptance Date: Oct 9, 2018
• Online Publication Date: Oct 23, 2018
• Publication Date: Apr 1, 2019
• Deposit Date: Nov 19, 2018
• Publicly Available Date: Apr 23, 2020
• Journal: International Business Review
• Print ISSN: 0969-5931
• Publisher: Elsevier
• Volume: 28
• Issue: 2
• Pages: 344-358
• DOI: https://doi.org/10.1016/j.ibusrev.2018.10.006
• Publisher URL: https://doi.org/10.1016/j.ibusrev.2018.10.006
• Related Public URLs: https://www.journals.elsevier.com/international-business-review/