Lingering effects of foreign resource dependency in Pakistan: Assessing gains from domestic resources

Purpose This study explores the asymmetric effects of FDI (Foreign Direct Investment) on economic growth in Pakistan. Methods This paper uses an Asymmetric Effects ARDL (Autoregressive Distributed Lag) model. Findings The results show that the effects of increasing and decreasing FDI are not equal....

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Bibliographic Details
Published in:Economic journal of emerging markets 2021-01, Vol.13 (2), p.178-187
Main Authors: Munir, Mubbasher, Meo, Muhammad Saeed, Younas, Kinza, Arshed, Noman, Jamil, Asma Khalid
Format: Article
Language:English
Subjects:
domestic investment
Economic growth
Emerging markets
Foreign investment
multinational corporations
pollution haven hypothesis
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Summary:Purpose This study explores the asymmetric effects of FDI (Foreign Direct Investment) on economic growth in Pakistan. Methods This paper uses an Asymmetric Effects ARDL (Autoregressive Distributed Lag) model. Findings The results show that the effects of increasing and decreasing FDI are not equal. The study concludes that reducing FDI is more beneficial for economic growth, particularly in the longer horizon. It mobilizes domestic investment and promotes financial freedom while reducing the reliance on pollutionintensive multinational corporations and taps indigenous knowledge gains. Implications This study proves that selfreliance is more beneficial for the case of Pakistan. Originality The researchers and policymakers are unclear about the merits and demerits of FDI as a substitute for domestic investment. Empirical studies are majorly convinced that an increase in FDI generally merits economic growth but weighs in the Pollution Haven Hypothesis and ignores the indigenous knowledgebased domestic resource.
ISSN:2086-3128
2502-180X
DOI:10.20885/ejem.vol13.iss2.art7