Impact of Transport and Technological Infrastructure in Attracting FDI in Pakistan
Impact of Transport and Technological Infrastructure in Attracting FDI in Pakistan

Summary/Abstract: This study analyzes the long run and short-run impact of transportation and technological infrastructure in attracting FDI in Pakistan, while transportation infrastructure is disaggregated into roads, rail, and air transport, and technological infrastructure is disaggregated into telecommunication, oil, and power consumption. The study uses annual time series data of Pakistan from 1973 to 2018 and applies the ARDL bounds testing approach for analysis. Results show that all the indicators of infrastructure, i.e. roads, railways, air transport, telecommunication infrastructure, power and oil consumption, have a positive and statistically significant impact on FDI in the long run. Oil and power consumption shows a greater impact on FDI because foreign investors associate the country’s development with its energy consumption. Transport infrastructure needs more improvement and development to facilitate foreign investments in the country. Government, as well as the private sector, has to pay attention to improving infrastructure facilities not only to fetch more FDI but for the economic progress of the country. Investment in infrastructure is required to provide better and efficient transport and technological infrastructure to facilitate the production process.

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