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G. Moheyuddin

The Macroeconomic Analysis of Foreign Capital Inflows in Pakistan: A Re-Examination Using Vector Error Correction Approach

 

Abstract:

 

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The topic of Foreign Capital Inflows (FCI) to Pakistan got much attention in empirical literature, but the existing literature on FCI about Pakistan mostly used the customary econometric tools like OLS, 2SLS, FIML and 3SLS for analysis. However, we know that most of the macroeconomic variables are non-stationary, which mandates the re-examination of the past studies using new time-series tools like cointegartion and ECM. Thus, the present book re-examines the macroeconomic role of Foreign Capital Inflows (FCI) in Pakistan through applying vector error correction model (VECM) on annual time-series data for the period of 1972-2006.

 

 

The present study does not find any evidence for direct positive impact of aggregate FCI on GDP growth and Investment (capital formation). However, the study finds the positive (complementary) relationship between FCI and domestic saving, thus suggesting an indirect positive impact of FCI on GDP through supplementing domestic resources. These results seem contradicting i.e. positive relation with domestic savings but negative linkages with investment and growth. However, we can interpret it as that FCI is supplementing the domestic resources and there is a need and justification for FCI in Pakistan due the shortage of domestic savings. But, these inflows of foreign capital are not transforming in the productive investment and thus not boosting economic growth. As this study shows that most of FCI are of non-investment (non FDI) type and are concentrated in the selected non-export-oriented and less-employment-generating sectors. In addition, the present study finds that exchange rate depreciation and current account deficit causes more inflows of foreign capital in Pakistan. While FCI also results in increasing the import of goods and services in Pakistan.

 

 

Subsequently, the present study suggests some policy recommendations like: (i) to target and identify the potential sectors for inviting the inflows of foreign capital, (ii) to change in composition of existing FCI, from non-FDI to FDI (investment) forms of FCI, (iii) to diversify the existing FCI from non-tradable and less job-oriented sectors to the tradable (export-oriented) and specially in agricultural-related manufacturing sectors, (iv) to mobilize the domestic resources, that will reduce the reliance on foreign assistance, and (v) to control the current account deficit and to stabilize the exchange rate, which will be helpful in reducing the reliance on foreign capital.

 

 

 
Published By: GRIN Publishing - GRIN Verlag GmbH, Marienstr.17, 80331 München (Munich), Germany

 

Download Book: http://www.grin.com/e-book/169492/?partner_id=722732

 

 
NOTE: This Book is not only helpful for the study of Foreign Capital (Foreign Aid + FDI + Foreign Portfolio Investment)but it is useful to learn Vector Error Correction Model (VECM) and Johansen Cointegration Technique. this study serve as a manual which explains the step by step method of Vector error-correction model and Johansen co-integration using e-views with practical example of FCI.
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G. Moheyuddin
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Apna Haroonabad (ہارون آباد  | Harunabad | Haroon Abad) is a Social Networking Community web portal for the Haroonabadians (the current and ex - citiczen of city Haroonabad including Haroonabad Girls and Boys). Apna Haroonabad offers many networking facilities (like Facebook) including;  Connect and expand your network, View profiles and add new friends, Share your photos and videos, Create your own group or join others, Make your profile, chat with other members, upload and share your pictures and movies, post and share your views and ideas in Apna Haroonabad's Forums. Along with this you will find lot of fun and entertainment activities.
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G. Moheyuddin
 SUBMITTED BY TONY WHITTEN ON East Asia & Pacific On The Rise
There is a great deal of passion surrounding the subject of tiger conservation, and there was a great deal of energy at the recent Global Tiger Workshop in Kathmandu, Nepal. (Photo courtesy of catlovers under a Creative Commons license.)

I’m writing this in Kathmandu, Nepal, at the end of the Global Tiger Workshop, the latest event leading up to the Tiger Summit expected to be held late next year in Vladivostok. This process all began with the major launch of the Global Tiger Initiative (GTI) in Washington, DC, in June 2008, and direct engagement with the tiger range countries on the issue of illegal wildlife trade really took off in Pattaya, Thailand, in April this year with ASEAN-WEN and other partners.

This was no ordinary World Bank-facilitated meeting inasmuch as National Geographic filmed the event, and it included a kilometer-long, elephant-led parade of children calling for the conservation of tigers. The GTI team keyed into the Asian and global media through op-eds, press releases, and YouTube. It also had significant support from the highest levels of the Nepali government which excelled itself not just in organizational support and hospitality, but also in commitments for tiger conservation – i.e. plans to double the size of one of its top tiger habitats, Bardia National Park. As remarked byEric Dinerstein, World Wildlife Fund-US Chief Scientist, there has not been such a positive period for the future of Nepal’s tigers in all the 35 years he has been living in and visiting Nepal.

G. Moheyuddin
 
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G. Moheyuddin
 SUBMITTED BY TOM GRUBISICH ON Development Marketplace

Development Marketplace 2009 goes into business on Tuesday, Nov. 10, 2009, with an intense four-day global competition among "100 ideas to save the planet," including some helping the world's most vulnerable people adapt to threatening climate change.

The public is invited, but visitors must register by Tuesday, Nov. 3.  Here's the four-day agenda for the event, which will be held in the Main Complex of the World Bank Group in Washington, DC. (Visitors should enter the Bank at 18th Street and Pennsylvania Avenue NW.)

Coming on the heels of the publication of the Bank's World Development Report 2010: Development and Climate Change, DM2009: Climate Adaptation has sub-themes aimed at producing streamlined, easy-to-scale innovations that will help protect people in developing countries, especially the poorest, who live in the most climate-vulnerable places and situations.

The three sub-themes:

1. resilience of Indigenous Peoples (at left, photo of Andes family),
2. climate risk management with multiple benefits and
3. climate adaptation and disaster risk management.

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G. Moheyuddin
 SUBMITTED BY JAMES I DAVISON ON East Asia & Pacific On The Rise
Click to view large.

A colleague over at the PSD blog first pointed out yesterday a brand new data visualization tool recently rolled out by the World Bank. The Data Visualizer displays the 2009 World Development Indicators – including 49 indicators for 209 countries from 1960-2007 – in an attractive, easy-to-understand and highly customizable way. The data contains social, economic, financial and environmental indicators and can be filtered in a number of different ways, including by region and country.

Someone familiar withGapminder.org, which I wrote aboutlast spring, will quickly notice that this new tool from the World Bank is quite similar to the Gapminder World animated graphing tool. As I mentioned in that post, I think one of the most interesting aspects of this type of data visualization is being able to literally hit Play and witness how the data indicators have changed over time right in front of your eyes.

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G. Moheyuddin
 SUBMITTED BY FUMIKO NAGANO On People, Spaces, Deliberation

"I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors." -Thomas Jefferson

Thoughtful comments to my recent post on approaches to fighting petty corruption sparked for me an interesting discussion with Sina Odugbemi about norms, public opinion and law. Mainly, our talk centered on the following “chicken or the egg” issue: Do you adopt laws first and ask citizens to obey them? Or, do you gauge public opinion around an issue first, then adopt a law that reflects that society’s prevailing view on that issue? No matter how you dice it, the enforcement of that law would be easier when it conforms to majority opinion as opposed to when it does not.

G. Moheyuddin
 SUBMITTED BY FLORIAN KITT On East Asia & Pacific On The Rise

Editors note: This post is part of Blog Action Day on climate change. For more information, visit blogactionday.org.

Apologies for having been out of touch since Carbon Expo. I needed a break, and summer in Croatia proved one can have a life beyond international development and carbon finance. Climate change, however, very much stayed on my mind with reports of wildfires in the United States and Greece. Clearly, one cannot escape all-encompassing global change, in particular when negotiations have now started in earnest on a post-2012 treaty to reduce carbon emissions and provide financing for developing countries.

Some still think that climate change is just a buzz topic and will quietly disappear from global attention. Let me assure you that many people in East Asian and Pacific countries would disagree. They are hit by natural disasters, which in recent years not only steadily increased in frequency, but also in intensity.

G. Moheyuddin
 

Earlier this summer, Pakistan defeated Sri Lanka to win the Twenty20 Cricket World Cup. Like any triumph in an international competition, there was a great sense of national pride, this time coming in a country with great need for such a unifying force. But, as Tunku Varadarajan wrote,  the victory was much more than just a boost to national morale:

“As Pakistan fights for its survival against the barbarian Taliban…its people find themselves possessed of a weapon with which to vanquish the forces of darkness. I speak here not of drones or tanks or helicopter gunships, but of the glorious game of cricket.”

This is a powerful concept: that cricket is a key weapon needed to defeat the “darkness” imposed by extremism in Pakistan. But why limit ourselves to discussing the power cricket possess to fight the Taliban? What about the effects all sports have to instill happiness, empowerment, and hope in people? Could using sports for development be an unconventional tactic for the fight against poverty?

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