Munazza Akhtar, Sarfraz Hassan, Khuda Bakhsh, Nazia Tabasam



This study determined the impact of foreign direct investment (FDI) along with other factors on exports of manufactured goods in Pakistan. The study employed time series data from 1990 to 2010. We applied ARDL approach to estimate the determinants of manufactured goods exported from Pakistan. Results showed that FDI, agriculture value added and technology have positive and significant impact on manufactured exports of Pakistan, while real effective exchange rate showed in negative and significant impact on manufactured exports from Pakistan. So, better environment for attracting FDI, investing in agriculture, value addition and introducing the latest technology in the country would further improve the exports of manufactured goods from the country.


FDI, Export growth, Value addition, ARDL, Pakistan

Full Text:




Asgedom, G., 2008, The performance and determinants of the Ethiopian leather export sector, Master’s thesis, School of Graduate Studies, Addis Ababa University, Ethiopia.

Athukorala, P. and J. Menon, 1995, Developing with foreign investment: Malaysia, Australian Economic Review, 28:9-22.

Atique and Ahmad, 2003, The supply and demand for export of Pakistan: The polynomial distributed lag model approach, The Pakistan Development Review, 42:961–972.

Banga, R., 2006, The export-diversifying impact of Japanese and US foreign direct investments in the Indian manufacturing sector, International journal of Business Studies, 37:558-568.

Barrios ,S., H. Gorg, and E. Strobl, 2003, Explaining firms, export behavior: R&D, spillovers and the destination market, Oxford Bulletin of Economics and Statistics, 65:475-496.

Bekele, M. and G. Ayele, 2008, The leather sector: Growth strategies through integrated value chain, Ethiopian Development Research Institute (EDRI), Addis Abeba, Ethiopia.

Brück and Wickström, 2004, The economic consequences of terror, European Journal of Political Economy, 20:293-300.

Clark, X., D. Dollar and A. Micco, 2004, Port efficiency, maritime transport costs and bilateral trade, NBER Working Paper, 10353.

Collier, P., V.L. Elliotte, H. Hegre, A. Hoeffler, M. Reynal-Querol and N. Sambanis, 2003, Breaking the conflict trap: civil war and development policy. World Bank Policy Research Report, Washington DC.

Drakos, K., 2004, Terrorism induced structural shift in financial risk: Airline stock in aftermath of the September 11th terror attack, European Journal of Political Economy, 20:436-46.

Edwards, S., 1998 Openness, productivity and growth: What do we really know? Journal of Economics, 108:383-398.

Enders, W. and T. Sandler, 1996, Terrorism and foreign direct investment in Spain and Greece, Kyklos, 49:331-52.

Enders, W., A. Sachsida and T. Sandler, 2006, The impact of transitional terrorism on U.S. foreign direct investment, Political Research Quarterly, 59:517-31.

Ghafoor, A., M. Aslam and S. Rasool, 2012, Determinants of leather goods export: A case of Pakistan, Journal of Business and Economics, 4:256-269.

Greenaway, D., N. Sousa and K. Wakelin, 2004, Do domestic firms learn to export from multinationals?, European Journal of Political Economics, 20:1027-1043.

Gul, S. and S.U. Rehman, 2014, Determinants of Pakistan’s export performance, Pakistan Business Review, 15:544-562.

Ito, H. and D. Lee, 2004, Assessing the impact of September 11 terrorist attack on U.S. airline demand, Journal of Economic and Business, 57:79-95.

Jordaan, A.C. and J.H. Eita, 2007, Determinants of South Africa’s exports of leather products, Working Paper Series: 2007-21, South Africa, Pretoria: Department of Economics, University of Pretoria.

Kneller, R. and M. Pisu, 2007, Industrial linkages and export spillovers from FDI, Journal of World Economics, 30:105-134.

Kohpaiboon, A., 2008, Producer concentration, conglomerates, foreign ownership, and import protection: Thai manufacturing firms a decade after the crisis, ICSEAD Working Paper 5.

Lemi, A., 2004, Foreign direct investment host country productivity and export: The case of US and Japanese multinational affiliates, Journal of Economic Development, 29:54-67.

Limão, N. and A.J. Venables, 2001, Infrastructure, geographical disadvantage, transport costs and trade, World Bank Economic Review, 15:451-479.

McKenna, J., 2005, Implications of transnational terrorism on international trade, available at dje/2006/McKenna.pdf

Mustafa, K. and M. Nishat, 2004, Volatility of exchange rate and export growth in Pakistan: The structure and interdependence in regional markets, The Pakistan Development Review, 43:813-828.

Pesaran, H., Y. Shin and R. Smith, 2001, Bound testing approaches to the analysis of level relationships, Journal of Applied Economics, 16:289-326.

Pesaran, H.M., 1997, Working with Microfit 4.0: Interactive econometric analysis, London: Oxford University Press.

Piamphongsant, T., 2007, Thai manufactured exports: Performance and technological change since the 1997 crisis, Ph.D thesis unpublished. London: University of London.

Priya, D.M. and M.V.L. Anthuvan, 2012, Impact of certification as moderator on export marketing strategy with reference to Tamil Nadu leather industry, International Journal of Research in Economics and Social Sciences, 2,3.

Roy, C., 2012, A study on environmental compliance of Indian leather industry and its far-reaching impact on leather exports, MPRA Paper No. 41386, Germany, Munich: Munich Personal RePEc Archive.

Ruane, F. and J. Sutherland, 2004, Ownership and export characteristics of Irish manufacturing performance, IIIS Discussion Paper, 32.

Sethi, D., 2007, Trends in foreign direct investment flows: A theoretical and empirical analysis, International Journal of Business Studies, 34:315-326.

Siddiqui, S., 2001, An overview of leather industry of Pakistan, Pakistan Leather Trades Journal, 41, 19.

UNCTAD, 1999, World investment report: Foreign direct investment and the challenge of development, United Nations Conference on Trade and Development UNCTAD New York.

Waliullah, M.K. Kakar, R. Kakar and W. Khan, 2010, The determinants of Pakistan’s trade balance: an ARDL cointegration approach, The Lahore Journal of Economics, 15:1-26.

Wilson J.S., C.L. Mann and T. Otsuki, 2003, Trade facilitation and capacity building: Global perspective, Unpublished manuscript, World Bank: Washington DC.

Zhang, K.H. and S. Song, 2001, Promoting export: the role of inward FDI in China, China Economic Review, 11:385-396.

Zhang, K.H., 2005, How does FDI affect a host country’s export performance? The case of China, The International Conference of WTO China and the Asian Economies III. In Xi’an China, June 25-26.

Zhang, Q. and B. Felmingham, 2001, The relationship between inward direct foreign investment and China’s provincial export trade, China Economic Review, 12:82-99.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.