Impact of Empowering Leadership on Project Success: Mediating Effect of Knowledge Acquisition and Knowledge Sharing in Software Industry of Pakistan

Abstract

Foreign Direct Investment (FDI) is to be considered very important factor for economic growth of any country. FDI brings with it employment, managerial skills, superior technology and economic development & growth. Most developing countries take FDI as an important tool to bridge the gap between their capitals and development programs. It also helps to acquire skills, new technology, organizational and managerial practices. However Multinational Enterprises considered many factors before investing in any country and corporate tax rate is one of them. The literature has provided many evidences that the MNEs invest in the lower corporate tax rate countries. The other considerable factors are availability of natural resources, infrastructure, skilled labor, political stability and business easiness etc. These are all location specific advantages. We examined the impact of corporate tax rate on attracting FDI in Pakistan In addition we also check the impact of terrorism, energy shortfall, skilled labor, infrastructure, degree of openness, corruption and political stability on FDI. The time series data of 28 years from 1989 to 2016 is considered for the study and a dummy representing three political regimes i.e. 1989 to 1999, 2000 to 2008 and 2009 to 2016 is also included. Johansen cointegration test, error correction model, granger causality and vector error correction model is used to evaluate the data. The result of the study shows that there is significant negative relationship between FDI and corporate tax rate, terrorism, energy shortfall, labor, infrastructure & degree of openness. In ganger causality test energy shortfall and FDI both have positive and significant relationship.