The impact of nation brand dimension on foreign direct investment (FDI) in Pakistan

Abstract

Pakistan is facing some limitations in implementing some of the programs due to financial constrains for developmental project. However, Foreign Direct Investment (FDI) can effectively resolve this issue if properly promoted. So, before a country can focus on foreign direct investment, it must be strategically positioned in term of its appeal and attractiveness and this is exactly what nation branding seek to accomplish. Having this in mind, the purpose of this study is to propose “Nation Branding” as an attractive strategy for attracting FDI in Pakistan. The study is based on 1984-2014 empirical data from Pakistan Economics Survey Reports. Using multiple regression on time series data, this study found that tourism, infrastructure, governance, people (including population, history, religion and education) play a strategic role in attracting FDI. We also found that this factors are key contributor in the Multivariate Granger Causality Analysis. Surprisingly, it was also found that export and FDI have a negative relationship in the long run and export coefficient in co-integration analysis is elastic in the long run, but in the short run, the relationship between export and FDI is positive. Thus, the analysis indicates that there is a unilateral relationship between exports and FDI. Finally, this study concluded that sustained and strategic efforts are required in improving the positive image of the country.