Internal Absorption and Foreign Direct Investment Inflows: A new approach towards Market Size

Mushtaq Ahmad, Ferhan K. Ahmad, Muhammad Ali Nasir, Gulzar Khan

Research output: Contribution to journalArticle

Abstract

In continuation of the efforts to understand the dynamics of internal market, this study proposes Internal Absorption as an instrument for measuring market size for economies which confront large trade deficit over a longer period of time. The study empirically examines the impacts of Internal Absorption along with trade openness and gross private investment on FDI inflows in Pakistan. The ARDL approach to co-integration and ECM based on ARDL is used to test the existence of long run relationships among variables for the period 1976-2009. The result establishes strong positive relationship between Internal Absorption and FDI inflows in short as well as in the long run.
Original languageEnglish
Pages (from-to)400-410
Number of pages11
JournalJournal of Economics and Political Economy
Volume2
Issue number3
Publication statusPublished - 1 Sep 2015
Externally publishedYes

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