The causal, linear and nonlinear nexus between sectoral FDI and infrastructure in Pakistan: Using a new global infrastructure index

This study explores the causal, linear, and nonlinear relationship between sectoral level foreign direct investment (FDI) inflows and infrastructure (transport, telecommunication, financial, and energy sectors) of Pakistan. Granger causality and autoregressive distributed lag (ARDL) approach to cointegration; suggest the presence of long-run bidirectional causality between infrastructure and FDI, while the nonlinear ARDL affirms the asymmetries in this connection. Results suggest that sectoral FDI inflows are important to enhance infrastructure in various sectors, both in the short and long-run. As improving infrastructure is vital to attracting FDI, results will be particularly useful to policymakers concerned about emerging markets.