ECONOMETRIC:

Panel Data
Descriptive statistics:
Variables
Fdi
Exg
Int
Sav

Mean

Median

Maximum

Minimum

Std.dev.

6.887616

0.635516
36.92559
7.142500

8.762824
490.5797
12.50000

-0.191275
1.975675
1.634167

1.808528
100.9578
3.081999

19.23310

18.20563

42.52258

-27.90501

10.18745

1.478209
56.08843

Int:

Descriptive statistics is the discipline of quantitatively describing the main features of a

collection of information, or the quantitative description itself. Here in this study we
considering FDI as our dependent variable and exchange rate, interest rate and national
saving are independent variables. The above table is showing average values of mean,
median, maximum, minimum and standard deviation for our variable.

It is apparent from the above table that FDI is a predominant factor in influencing
the contents of contemporary process of economic development. A country can
reap the fruits of FDI with stable policies and with better incentives. It is often
argued that the successful growth experience in the Far Eastern countries owes
much to the generous flow of capital towards that region. This growth model as
many developing countries, including Pakistan are actively seeking the role of FDI in
uplifting their growth performance.

Unit root test.

VARIABLES

Test

Levels

statistics

probity

Fdi

LEVIN,LIN&CHU t*
Im,pesaran and shin
W-stat
LEVIN,LIN&CHU t*
Im,pesaran and shin
W-stat
LEVIN,LIN&CHU t*
Im,pesaran and shin
W-stat
LEVIN,LIN&CHU t*

1st
differenc
e
1st
differenc
e
1st
differenc
e
1st

-7.63044
-9.56396

0.0000
0.0000

-6.41948
-7.94501

0.0000
0.0000

-10.5776
-7.65038

0.0000
0.0000

-14.6362

0.0000

Exg

Int

Sav

Im,pesaran and shin

W-stat

differenc
e

0.0000
-13.2637

Int:

A unit root is a feature of processes that evolve through time that can cause problems
in statistical inference involving time series models. A linear stochastic process has
a unit root if 1 is a root of the process's characteristic equation. Such a process is nonstationary.
An F-test is any statistical test in which the test statistic has an F-distribution under
the null hypothesis. It is most often used when comparing statistical models that have
been fitted to a data set, in order to identify the model that best fits the population from
which the data were sampled.
In this test we are considering FDI as dependent variable and by applying Levin, Lin &
Chu test shows 1st deference of level and its value is -7.63044 and Im,pesaran and shin
W-stat has its value -9.56396, these value shows
All the variables for Pakistan are stationary at on first difference at 5% level of
significance study are non-stationary. Test has been applied to check for the unit
root. Test verified that all the variables are non-stationary in their level form but
their first difference is stationary at 5% level of significance. The results are
presented in Table which shows that the variables in our study are non stationary.

Panel analysis:FIXED
Exg

Probity
Adjusted Rsqu

0.3822

Int
0.0645

DurbinWatson stat
Int:

Sav
0.0000

sav

0.2963

0.0348

0.5

0.0000
0.079824

49351
0.510295

0.557066

-0.000852

0.013319

34.21828

F-statistic`
Coefficient

RANDOM
Exg
Int

30.82855
-0.001001
0.524507

27.67742

0.046615
0.805159

0.044620
-0.063930
0.557066

0.590811

-0.001185
0.246373

3.821309
-0.072356

0.046615

0.277151

0.296074

Our findings are also suggestive of a dominant complementarily effect between

foreign direct investment and other variables where it is considered that all
independent variables are directly proportionate to the FDI and support in
increasing trend of our dependent variable.

Time series
Descriptive statistics:Variables
Exg
FDI
Int:

mean
46.41430
1.005817

Median

Maximum

minimum

Std.dev.

45.04667
0.677094

101.6289
3.668323

13.11697
0.102667

26.01377
0.877341

It implies that change in independent variables has the negative impact on the
change in the output level. It also shows that change has positive impact on interest
rate and savings. The reason for this is that the bulk of Pakistani imports are
consumer goods, which do not enhance the level of productivity.

Unit root test:VARIABLE

Exg
Fdi

METHOD
Augmented Dickeyfuller test statistics
Augmented Dickeyfuller test statistics

Levels
nd

2
Difference

statistics

probity

-5.111332

0.0005
0.0018

-4.511180

Int:

The above table shows that variables for Pakistan have cross relation that implies
the negative relation of variables. Test has been applied to check for the unit root.
Test verified that the variables are non-stationary in their level form but their first
difference is non stationary at 5% level of significance. The results are presented in
Table which shows that the variables in our study are non stationary.

Johnson co integration
No. of CE(s)
None *
At most 1 *

Eigenvalue
0.288799
0.046911

Statistic
11.27657
1.393371

Critical Value
15.49471
3.841466

Prob.**
0.1950
0.2378

Int:
The equation shows that exchange rate has a positive relationship with real FDI and it increases because
of increase in exchange rate. This positive relationship is in uniformity. Coefficient is statistically significant
at 1% level of significance as t-statistic is considerably good. The intercept of the co integrating equation
implying that real FDI would still be positive if all the explanatory variables set equal to zero. Exchange
rate openness is statistically significant at 1% level of significance.

Error correction test

Variable
C
D(EXG)
FDI(-1)
EXG(-1)

Coefficient
0.269952
-0.083713
-0.080075
0.001655

Prob.
0.1426
0.0081
0.4687
0.6765

Adjusted Rsquared
0.238731

Durbin-Watson
stat
1.504626

F-statistic

4.031422

int:
Here it can be argued that both the variable can actively respond to each other and
setting one of the two variables as pre-determined would be a poor assumption.