Abstract
This paper examined the effect of Absorptive Capacity (ABC) on Foreign Direct Investment
(FDI) in optimum internal utilization using Auto Regressive Distributed Lag Approach
(ARDL). The results reveal the relevancy of human capital, patent application, electricity
consumption, inflation, number of Doctor of Philosophy (Ph.D.), and trademark as
determinants of FDI in Pakistan. In long run FDI is determined by human capital, patent right
application, number of PhDs, electric power consumption, inflation, and trademark
application while in short run lagged inflation and lagged trademark applications are the
relevant arguments. An increase in human capital, patent application, and electricity
consumption augments growth process of Pakistan, whereas a rise in the number of PhDs and
trademark application retards growth process. Based on empirical evidence, it is
recommended that the relevant authorities should formulate policies that augment factors
causing FDI inflows and control those that retard it.
Sohail Farooq, Ijaz Ahmad, Muhammad Akram Gilal, Abdul Rahman Nizamani. (2018) Absorptive Capacity in Optimum Internal Utilization of Foreign Direct Investment in Pakistan, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-16, Issue-2.
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