Link between Stock Market Development, Foreign Capital Inflows, Trade Liberalization and Economic Freedom in Pakistan

Abstract

For the development of a country and encouraging the quest of continued reforms the competition for FDI is growing. Developing countries like Pakistan has, the more quests for foreign direct investment. To draw the attention of FDI, countries guarantee the existence of records regarding structural development by giving surety of business success to foreign investors. The main aim of this study is to establish linkage among stock market development, foreign capital inflows, trade liberalization and economic freedom in Pakistan uses annual data of 1989 to 2017. The results of the study show that there exists co-integration among all the variables while considering FDI as dependent variables. The increment in these factors of FDI i.e. (SMD, TL, EG and EF) helps boosting FDI into the country. For the attraction of FDI into the country, policy makers are recommended to formulate effective policies and strategies.