Abstract:
For the purpose of gaining stability and higher benefits, nations have been allowing others to
invest in their countries or looking for the major areas of concerns where profitable investments
can be made by the organisations in another country. This research work has been conducted to
identify the economic determinants of FDI and evaluate the impact of economic determinants on
the FDI inflow in Pakistan. Due to globalisation and the internationalisation of the business
operations carried by an organisation, there has been a significant increase in the foreign direct
investments by the companies. This increase in the foreign investments is mainly for the sake of
gaining competitive advantage and minimising the adverse business situations. The researcher
from the existing sources identified that market size, wage rate, domestic investment, trade
openness, exchange rate, infrastructure, FDI policies, taxes, inflation, official development
assistance government consumptions and business facilitation are the important economic
determinants of FDI. The research conducted a research and collected secondary data from the
previously done researches on the economic determinants of FDI and found that market size,
wage rate and infrastructure has significant positive impact on the FDI in Pakistan, trade
openness and exchange rate have a highly significant positive relationship with FDI, inflation
and government consumption have a statistically significant impact on FDI while taxes
negatively affect the FDI in Pakistan.
