The Causal Relationship between Foreign Direct Investment, Imports and Exports in Pakistan


    Muhammad Irfan Chani, Muhammad Azam & Akmal Younas


    Chani, M. I. Azam, M. & Younas, A. (2014). The causal relationship between foreign direct investment, imports and exports in Pakistan. Bulletin of Business and Economics, 3(3), 142-149.


    This study evaluates the causal relationship between Foreign Direct Investment (FDI), imports and exports in Pakistan by using the time series data from 1972to 2009. Ng. Parren Unit Root Test, Johansen Cointegration Test and Granger Causality are used for empirical analysis. The results indicate that there is long run equilibrium relationship among FDI, imports and exports. The estimates of causality test indicate that there is feedback relationship between FDI and export performance in the country. Furthermore, the results are in favor of bidirectional causality between imports and FDI. The inferences drawn from the study have stronger policy implication for FDI.


    Foreign Trade, FDI, Imports, Exports, Trade Balance, Trade Liberalization

    Jel Code:

    Article Type:

    Research Article




    Research Foundation for Humanity (RFH)

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