In this paper we have discussed the vital role of political stability on the link between
macroeconomic variables and FDI. For this purpose we have used a data of year 1991 to 2011. In
this empirical analysis we have used ADF test for the checking the stationary of the data and
other software's are SPSS and reviews. This result of this study have made sure that import,
BOP, export and GDP growth rate have significant impact on the FDI inflows in the Pakistan
and inflation has a negative impact on the FDI based on this research has proved that political
stability is crucial for the expansion of foreign direct investment.