GLOBALIZATION AND ITS COMPARATIVE EFFECTS ON THE ECONOMIES OF PAKISTAN, AND TURKEY
ARFA SHAFIQ *
Superior University, Lahore, Pakistan.
*Author to whom correspondence should be addressed.
Abstract
The main purpose of the present study is to find how different variables like balance of trade and per capita GDP, attract FDI in Pakistan, and to ascertain impacts of political stability within a country along with the effects of international interferences on its economy. For this purpose effects of globalization on the economies of Pakistan and Turkey faced by different environments are presented. Economy of Pakistan is affected by war on terror in Afghanistan, inside terrorist activities and low investment. The economy of Turkey is progressing both in terms of its trade and technical achievements. The main variables for globalization are financial liberalization, privatization, trade and investment. During the present study, the econometric model consists of the variables FDI(foreign direct investment), as dependent variable and YT (per capita income), BOT(balance of trade) as independent variables. Johansen co-integration test has been used for long run relationship among the variables and vector error correction estimates for short run dynamics along with variance decomposition study of the determinants. CUSUM, and CUSUMSQ tests are carried out to check the stability of the model. The results show all the variables are statistically significant. The empirical analysis of the data and research findings suggest Pakistan, and Turkey to concentrate more on exports, and create environments suitable for investment and also to have political stability.
Keywords: Globalization, foreign direct investment, econometric tests, variance decomposition