Chapter No.3 3. Methodology 3.1 Research methodology

Chapter No.3 

3. Methodology

3.1   Research methodology

Research methodology is an efficient tactic to solve the problems.  This is an important analysis of evidence for the target of gaining information.

3.2    Scope of the study

Foreign direct investment plays an essential role to recover the deficit. This work is determining earlier financial condition of the country that is comparative to make the decision.

3.3 sources of the data

This data are composed on the basis of secondary sources. In this study that data are used from 1975 – 2012 are called time series data. Secondary data collected from different causes.

Central bank of Pakistan

World Bank indicator

Articles

Pakistan bureau statistics

3.4 Specification of the model

So there are several factors those   estimate the FDI of Pakistan, but in this segment some key factors are used to define the FDI.

FDI=f (GDP, M, X, CPI)

FDI= foreign direct investment

GDP= Gross domestic product

M= import

X= export

 CPI= consumer price index

3.5   Details of variable   

3.6 Foreign direct investment

FDI is a core variable of the economy growth, the one nation invest in another country to getting the higher earning on capital because. In agrarian countries labor is very cheaper. In this revision FDI is refers to regress and factor to estimate the   FDI determinants.

Gross domestic product (GDP)

Gross domestic product is core variable in the whole world, simply GDP refers to the worth of all ending goods and services during the specific period of time in the economy.

3.7    Import

The main issue is that import and FDI is negative relationship. Mostly tariff imposed on import goods so the balance of trade will be negatively due to the burden of import.

3.8    Export

Export is very important variable to the growth of economy, non-tariff barriers on export to increase the export level, raw materials or primary good’s  that has positive effect on the economic growth. This relationship shows the positively with FDI.

3.9      Consumer price index (CPI)

 Main problem of desirability of FDI in any country is related to the consumer price on the basis of demand of consumers which confirm the tendencies of foreign investor to investing in one country. On the behalf of consumer demand, when the prices are   higher, then demand will be less as compared to supply.