Abstract
A number of tries helped estimate a regression model, speci- fying short run and long run relationship between foreign direct investments (FDIs) and its two major determinants, namely trade openness and corporate tax rates in Pakistan. The estimated model, and both its Co-integration and ECM components, brings on surface certain important implica- tions, for all major stakeholders. The public sector policy mak- ers need to take note of the fact that foreign direct invest- ment has been found being significantly affected positively by trade openness and negatively by corporate tax rates. So, ef- forts to enhance trade openness need to be ncouraged. Simi- larly, the Federal Board of Revenue officials responsible for taxation policies in the country, should be aware of the fact that rates of corporate tax negatively and significantly affect FDIs in Pakistan; hence they should take this fact in to account while framing taxation policies and determining rates of tax- es. The researchers interested in the topic for future research are rged to carry out research on optimizing relationship of tax rates and FDIs, for determining and quantifying the exact levels of relationship between the two variables. JEL Classification:C13, C22, C32, C52
Masood Shoukat Malik, Anwar F. Chishti. (2013) Trade openness and corporate tax rates determine FDI in Pakistan: a Cointegration-ECM analysis, Jinnah Business Review, Volume 1, Issue 1.
-
Views
506 -
Downloads
40
