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Journal of Management Sciences - Volume 2, Issue 1 2015
By M. Tahir Suleman, Muhammad Talha Amin
10.20547/jms.2014.1502101
Keywords: Pakistan; Cobb-Douglas, panel unit root test, panel cointegration test; long-run relationship
This study examines the impact of sectoral foreign direct investment on the industrial economic growth of Pakistan, by means of Cobb-Douglas production function. Three sectors were used namely manufacturing, construction, mining & quarrying for panel data during the period of 1997 to 2011. This study used three standard panel unit root tests; PP statistics panel unit root, ADF statistic, IPS panel unit root test. Moreover, to test the cointegration between the variables, three dierent types of test were used for the panel cointegration test based on Johansen sher, Kao residual cointegration, Pedroni residual cointegration tests to nd the long run relationship between sectoral FDI and industrial economic growth of Pakistan and the. Results revealed that sectoral FDI has positively and significantly affect the industrial growth of Pakistan.