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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
other variables are slightly positively skewed. We cannot compare std. Deviation because
the variables have different unit of measures.
Table 3 represents table of correlations. This table represent three variables GDP US$,
industrial value added and telephone mainline are positively correlated with FDI (r =
.897, p= 000, r = .751, p = 000, and r = .735, p = 000 respectively) which shows strong
and significant relationship between these three independent variables with FDI. The
relationship between GDP growth and export of goods and services with FDI are not
statistically significant. In the case of these correlations the null hypothesis of no
correlation can‘t be rejected as the P-values are much greater than 0.05.
Table 4 presents the results of the regression analysis. The results show that all of the
independent variables except GDP growth and telephone mainline effect FDI as shown
by the values of the t-statistic and the corresponding P-values. T-test is used to test the
significance of the individual partial regression coefficients. Null hypothesis in this test is
set as the partial regression coefficient is zero. This test shows that the coefficients of all
the predictors except GDP growth and telephone mainline are statistically significant at
less than five percent level of significance. Yet the effect of export of goods and services
on FDI is found to be negative but and statistically significant.
In table 5 the value of adjusted coefficient of Determination (Adj. R 2 ) is .859 which show
that 85% variation in Dependent variable (FDI) is due to independent variables which are
consider in this study. The value of F-statistic is statistically significant which means that
all the independent variables are jointly affect the Dependent variable which is FDI.
Table 3 Represent that FDI is positively correlated with GDP (r = .897, p =000) which
represent that there is strong positive and significant relationship between both variables.
In table 6 the value of adjusted coefficient of Determination (Adj. R 2 ) is .798 which
shows that 79% variation in GDP growth is due to Foreign Direct investment. In F-Test
and in T-Test in table 7 P-values are also significant which means that FDI has
significant affect on GDP growth.
6. Conclusion
After studying the empirical results we come to know that : (1) Market size, Trade
openness / Access to international market and Quality of labor are the major determinants
that have significant impact on Foreign Direct investment (FDI) inflow in Pakistan. (2)
Trade openness / Access to international market have significant but negative impact on
Foreign Direct investment (FDI) inflow. (3) Market potential and communication
facilities have no significant impact on Foreign Direct investment (FDI) inflow. (4) There
is a strong and positive impact of Foreign Direct investment (FDI) on GPD growth of
Pakistan.
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 202
JANUARY 2011
VOL 2, NO 9