Telecommunication Infrastructure and Foreign Direct Investment in Pakistan: An Empirical Study

This paper explores the role of infrastructure availability, particularly with respect to telecommunication in stimulating Foreign Direct Investment (FDI) in Pakistan. Mobile cellular subscription is taken as a proxy variable for infrastructure along with market size, labor force and trade openness as explanatory variables. The study covers the time period from 1990 to 2012 based on the fact that mobile cellular service introduced in 1990s in Pakistan for the first time. Johansen test of Co-integration has been used to check the long run relationship between the variables and then ordinary least square technique has been applied to estimate the coefficients of all the variables. The results of empirical analysis indicate the positive significant effect of infrastructure in attracting FDI to Pakistan.