4.1.

Correlation Matrix:
(Number of Observations = 50)
4.1.2: Table
Variables

EXP

FDI

XV

EXPORTS

1.0000

FDI

0.6707

1.0000

XV

-0.0740

0.0833

1.0000

The above correlation matrix table represents the relationship between the variables dependent
(exports) and independent (exchange rate volatility and foreign economic activity which is
termed as FDI is the model). The matrix shows that there is positive correlation between
dependent variable ( Exports ) and independent variable FDI and the second relationship is
shown as that there exists negative correlation between dependent variable Exports and
independent variable Exchange rate volatility which was the major concern of the study .
The relationship between Exports and Exports is positive. The correlation between any two
variables and the relationship in itself is always equal to 1.The correlation between Exports and
FDI is observed positive in the above given matrix .the results says that as the foreign direct
investments increases there is witnessed an increase in the Exports .The interrelationship
between Exchange rate Volatility and Exports of Pakistan is Negative. The results show that with
increase in volatility in foreign exchange rates the Exports of Pakistan reduces with a significant
number.
4.2. Descriptive Statistics Analysis:
4.2.1. Table
Variable
Observations Mean
Std. Dev.
Min
Max
EXP

50

.0819154

.0258291

.0334408

.1625466

FDI

50

.4113291

.582368

.0079262

2.532598

XV

50

.000983

.0002358

.000158

.0020863

The table covers the macro economic data on the variable of exports, foreign direct investment
and exchange rate volatility from the period 1980 Q1 to 1990 Q4.The table shows considerable
variation between maximum and minimum values of the variables and the means value and
standard deviation of the observations on time series base data.
4.3. OLS Regression Analysis:
Number of observations 50
Data time period 1980Q1 to 2012 Q4
Data type: Time Series
Dependent Variable: Exports of Pakistan

4.3.1. Table.
Source

SS

DF

Model

.040483643 2

Residual

.046245013 128

Total

.086728656 130

MS

Number of observations=50
F(2, 128) = 56.03
.020241821 Prob > F = 0.0000
R- square =0.4668
.000361289 Adjusted R square
=0.4585
Root MSE = .01901
.000667144

4.4. Overall fitness of the Model:

Number of observations are 131 which are used in OLS regression analysis. The Regression
model was run through Stata application software.F (2, 128) -This is the F-statistic and can be
calculated as Mean Square Model (.020241821) divided by the Mean Square Residual
(.000361289), revealing the results of F=56.03. Probability > F - is the p-value associated with
the above F-statistic. It is used in testing the null hypothesis that all of the model coefficients are
0. The F statistic is Fit which is less than 0.05 @ significance of 1%.R-square is the quantity of
variance in the dependent variable (exports) which can be explained by the independent variables
(exchange rate volatility and foreign direct investments). R Square is 46 % which indicates
that variation in dependent variable is due to independent variable at this percent. This is an
overall measure of the strength of association and does not reflect the extent to which any
particular independent variable is associated with the dependent variable.

4.4.1. Table:
EXP
Coefficient

Std. Error

P>|t|

[95% Conf.

Interval]

FDI

.0302285

.0028726

10.52

0.000

.0245446

.0359123

XV

-14.32814

7.094969

-2.02

0.046

-28.36675

-.2895344

_cons

.0835662

.007171

11.65

0.000

.0693771

.0977553

The co efficient of the values for the regression equation for calculating the exports as dependent
variable from the foreign direct investments and exchange rate volatility as independent
variables. The result indicates that a one unit of change in independent variable FDI leads
to .0302285 numbers of units change in dependent variable exports of Pakistan. The coefficient
of the FDI is .0302285 which gives a result that with every unit increase in FDI there will come
this number .0302285 of units increase in exports is expected, holding all other variables
constant. Exchange rate Volatility (XV) means that with every unit increase in independent
variable XV , a this number (-14.32814) of units decrease in the exports is apparent , holding
all other variables constant. This is negative correlation. The standard errors are the errors linked
with the coefficients of the variables. P>|t is This showing the result that the p-values used in
trying the null hypothesis that the coefficient is 0 using a standard of 0.05.The p value for FDI
is 0.000 which is less than 0.05 and the relationship holds is significance at 1 %. The p value for
XV is 0.046 which is small than 0.05 this relationship also holds significance at 5 %.( Constant)
is significant at 0.000 which is less than 0.05 at 1 % significance.