The Nexus Between Foreign Aid and FDI Inflows: Evidence From Selected South Asian Economies

Nadia Hidayat, Assad Ullah, Ghazala Ghazala


This research work examines the nexus between foreign aid and FDI inflows in selected South Asian economies (Pakistan, India, Bangladesh and Srilanka). The study employed econometric technique of random effect. A significant positive relationship between foreign aid and FDI inflows was observed for the period 2000-2013. Moreover, the study also confirmed the previous literature by establishing positive and significant relationship among GDP growth, law & order and FDI Inflows. The study concludes that foreign aid plays a crucial role in the determination of FDI inflows towards South Asian region. In this regard, the higher authorities need to build strong ties with the developed world.


Foreign aid; FDI inflows; South Asian economies

Full Text:



Ali, S., & Guo, W. (2005). Determinants of FDI in China. Journal of Global Business and Technology, 1(2), 21-33.

Aqeel, A., Nishat, M., & Bilquees, F. (2004). The determinants of foreign direct investment in Pakistan [with comments]. The Pakistan Development Review, 651-664.

Bénassy-Quéré, A., Coupet, M., & Mayer, T. (2007). Institutional determinants of foreign direct investment. The World Economy, 30(5), 764-782.

Bhagwati, J. N. (1978). Anatomy and consequences of exchange control regimes. NBER Books.

Dunning, J. H. (1976). Trade, location of economic activity and the MNE: A search for an eclectic approach. University of Reading, Department of Economics Reading.

Ghura, D., & Goodwin, B. (2000). Determinants of private investment: A cross-regional empirical investigation. Applied Economics, 32(14), 1819-1829.

Huang, Y., & Wang, B. (2011). Chinese outward direct investment: Is there a China model? China & World Economy, 19(4), 1-21.

Hurst, L. (2011). Comparative analysis of the determinants of China’s state-owned outward direct investment in OECD and non-OECD Countries. China & World Economy, 19(4), 74-91.

Ismail, N. W. (2009). The determinant of foreign direct investment in ASEAN: A semi-gravity approach. Transition Studies Review, 16(3), 710-722.

Ito, H., Jongwanich, J., & Terada-Hagiwara, A. (2009). What makes developing Asia resilient in a financially globalized world? (No. 181). Asian Development Bank.

Kant, C. (1996). Foreign direct investment and capital flight International Finance Section, Department of Economics, Princeton University.

Krugman, P. (1999). 14 WHAT HAPPENED TO ASIA7. Global Competition and Integration, 4, 315.

McGillivray, M. (2009). Aid, economic reform, and public sector fiscal behavior in developing countries. Review of Development Economics, 13(3), 526-542.

Mhlanga, N., Blalock, G., & Christy, R. (2010). Understanding foreign direct investment in the southern African development community: an analysis based on project-level data. Agricultural Economics, 41(3-4), 337-347.

Mohamed, S. E., & Sidiropoulos, M. G. (2010). Another look at the determinants of foreign direct investment in MENA countries: an empirical investigation. Journal of Economic Development, 35(2), 75.

Moosa, I. A., & Cardak, B. A. (2006). The determinants of foreign direct investment: An extreme bounds analysis. Journal of Multinational Financial Management, 16(2), 199-211.

Mottaleb, K. A., & Kalirajan, K. (2010). Determinants of foreign direct investment in developing countries a comparative analysis. Margin: The Journal of Applied Economic Research, 4(4), 369-404.

Onyeiwu, S., & Shrestha, H. (2004). Determinants of foreign direct investment in Africa. Journal of Developing Societies, 20(1-2), 89-106.

Sekkat, K., & Veganzones-Varoudakis, M. A. (2007). Openness, investment climate, and FDI in developing countries. Review of Development Economics, 11(4), 607-620.

Vijayakumar, N., Sridharan, P., & Rao, K. C. S. (2010). Determinants of FDI in BRICS countries: A panel analysis. International Journal of Business Science & Applied Management, 5(3).

Wafure, O. G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human-Social Science Research, 10(1).

Wei, C.-C., & Chang, H.-W. (2011). A new approach for selecting portfolio of new product development projects. Expert Systems With Applications, 38(1), 429-434.

Zorska, A. (2005). Foreign direct investment and transformation: evolution and impacts in the Polish economy. Eastern European Economics, 43(4), 52-78.



  • There are currently no refbacks.

Copyright (c) 2017 assad ullah

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Share us to:   


  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.

We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:;;

 Articles published in International Business and Management are licensed under Creative Commons Attribution 4.0 (CC-BY).


Address: 9375 Rue de Roissy Brossard, Québec, J4X 3A1, Canada 
Telephone: 1-514-558 6138 
Website: Http:// Http://

Copyright © 2010 Canadian Research & Development Centre of Sciences and Cultures