Why Did FDI Inflows of Pakistan Decline? From the Perspective of Terrorism, Energy Shortage, Financial Instability, and Political Instability

Bano, Sadia; Zhao, Yuhuan; Ahmad, Anjum; Wang, Song; Ya, Liu

doi:10.1080/1540496x.2018.1504207

Cited by 39 publications

(36 citation statements)

References 64 publications

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“…FDI inflows are found essential for Pakistani technological advancement (Bano et al, 2019). However, terrorism-associated risks reduce the flows of investment and investors are reluctant to invest in Pakistan (Bano et al, 2019;S. J. Shahzad et al, 2016) and the slowing down FDI inflows could decrease transfer of technologies and impede technological advancement (Koh, 2007).…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

“…Alesina et al (1996) stated political instability as the tendency of collapse of government may result from internal competitions between different stakeholders in government or from other conflicts. Scholars associated the political instability with weak institutional capacity, low economic growth, and small investment inflows (Bano et al, 2019;Khaldūn, 1958). Usually, political instability is connected with the perception of failed state (Mommsen, 1992).…”

Section: Political Instability and Innovationmentioning

confidence: 99%

“…Politically unstable countries may experience shocks of civil war, social unrest, and violence and people there are probable to see their government be overthrown through unconstitutional means (military takeovers). Such situations discourage the potential investors to make investment in such countries (Bano et al, 2019;Feng, 1997). The instability may result in lower FDI inflows and discourage business activities and human capital development (Globerman & Shapiro, 2003), which can adversely affect the innovation rates of such countries (Allard et al, 2012).…”

Section: Political Instability and Innovationmentioning

confidence: 99%

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Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?

et al. 2020

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Sound innovation capabilities help the nations not only to capture bigger market shares but also to sustain long-term economic growth. Innovation is of vital importance at all stages of a country’s development as it promotes productivity, value creation, employment, economic growth, and sustainability. Several factors can affect the innovation activities of a country. For example, peaceful and stable environment, effective macroeconomic designs, sound institutional quality, and efficient utilization of resources are of great significance for a country to nourish economic, business, and market activities. Applying the Auto Regressive Distributive Lag approach to cointegration, this study investigates the short- and long-run impacts of aid, political instability, and terrorism upon the innovation of a laggard economy, namely, Pakistan. Our findings reveal that aid, political instability, and terrorism all have adverse impacts on innovation. Results across robustness checks remain the same. This study is of strong policy implications for policymakers, governments and opposition parties, and security and intelligence agencies to develop sound macroeconomic designs and policies, bring harmony for political stability, and curb terrorism, respectively.

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Section: Empirical Results and Discussionmentioning

confidence: 99%

Section: Political Instability and Innovationmentioning

confidence: 99%

Section: Political Instability and Innovationmentioning

confidence: 99%

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Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?

et al. 2020

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“…On the other hand, terrorist activities adversely affect the economy of a country by decreasing confidence of investors and FDI inflows. Further, it also damages the essential infrastructure, causes financial instability, high economic cost, and increases counterterrorism costs [14][15][16].…”

Section: Introductionmentioning

confidence: 99%

Impacts of Voice and Accountability upon Innovation in Pakistan: Evidence from ARDL and Maki Cointegration Approaches

Nadeem

Jiao

Nawaz

et al. 2020

Mathematical Problems in Engineering

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Innovative capacity has a decisive and crucial role in determining who is prospering in the global arena. Innovation is crucial for value creation, high productivity, economic growth, employment, and sustainable development that benefit the consumers, firms, businesses, and economy as a whole. Several institutional, political, and social conditions lead to different responses of innovation. For instance, low voice and accountability may lead to low institutional setting, cronyism, and favoritism in allocation of resources, which can harm innovation. Similarly, the terrorist attack of 9/11 caused horrific scales of destructions, which caught the countries on various fronts such as economic, political, and technological. Further, sound infrastructure and savings rates are essential to enhance innovation. Applying the ARDL approach to cointegration, this study investigates the impact of voice and accountability, terrorism, infrastructure, and savings on innovation in Pakistan. The empirical evidence shows that low voice and accountability and terrorism have adverse impacts on innovation in the short- and long-run periods. Further, findings reveal that inadequate infrastructures and low savings adversely affect the innovation in both periods. Various robust checks such as Maki cointegration, Johansen cointegration test, fully modified ordinary least square, dynamic ordinary least square, and canonical cointegration regression corroborate the results. The findings of the study would be of substantial implications for government and policymakers.

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“…The study used the foreign direct inflows (FDI) as a proxy for foreign direct investment (Asiedu, 2002;Aziz, 2018;Cavallari & d'Addona, 2013;Cleeve et al, 2015;Gohou & Soumaré, 2012;Paramati, Ummalla, & Apergis, 2016). Control variables reflect the FDI determinants that predominant in the most related literature (Antonakakis & Tondl, 2015;Aziz, 2018;Bailey, 2018;Bano, Zhao, Ahmad, Wang, & Liu, 2018;Bayraktar, 2013;Bolívar et al, 2019;Cavallari & d'Addona, 2013;Fadiran, 2019;Ghazalian & Amponsem, 2019;Kishor & Singh, 2015;Konara & Wei, 2019;Li & Tanna, 2019;Lu & Liu, 2018;Ma, 2019;Yahia, Haiyun, Khan, Shah, & Islam, 2018). Table 2 shows the description and sources of the variables used.…”

Section: Data Description and Sourcesmentioning

confidence: 99%

The Common Market for Eastern and Southern Africas (COMESA) Free Trade Area (FTA) and Foreign Direct Investment (FDI) Nexus

Yahia

Liu

Shah

et al. 2019

Journal of Asian Business Strategy

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There is neither theoretical foundation nor clear-cut empirical base on FDI determinants, amidst the proliferation of FTAs associated with the overlapping tendencies (‗spaghetti bowl'), stalled Doha Development Multilateral negotiation, and the increasing argument on whether such FTAs can stimulate sustainable growth through, amongst other factors FDI (Yeats, Amjadi, Reincke, & Ng, 1997). This study examines whether the Free Trade Area (FTA) of the Common Market for Eastern and Southern Africa (COMESA) can predict the inward Foreign Direct Investment (FDI). Considering the limitation on the benchmark test (OLS Fixed Effect), the Feasible Generalized Least Squares (FGLS) robustness exhibits a positive and strong influence of COMESA-FTA on inward FDI. However, the interactive magnitudes of the FTA with Institutional Quality (IQ) and Financial Development Index (FINDI) demonstrate an inverted-U negative and significant relationship with inward FDI. Trade Openness (TOP) and the Human Development Index (HDI) have positive associations with the inward FDI, while FINDI adversely affected inward FDI. The findings suggest that FTA, TOP, HDI, and FINDI should be considered in policy. harmonization and implementation. However, the mixed coefficients of FTA across models singling unnecessary administrative burdens and inconducive policies that may create barriers from attracting FDI.

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Why Did FDI Inflows of Pakistan Decline? From the Perspective of Terrorism, Energy Shortage, Financial Instability, and Political Instability

Cited by 39 publications

References 64 publications

Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?

Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?

Impacts of Voice and Accountability upon Innovation in Pakistan: Evidence from ARDL and Maki Cointegration Approaches

The Common Market for Eastern and Southern Africas (COMESA) Free Trade Area (FTA) and Foreign Direct Investment (FDI) Nexus

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