Impediments to attract fdi in pakistan

Notes: For example, Pakistan can be a potential transit route for energy from Iran and Central Asia through the construction of pipelines.

foreign direct investment in pakistan 2018

For example, if a US multinational, such as Nike built a factory for making trainers in Pakistan; this would count as foreign direct investment.

World Development, 59, Rhee, Y.

Trends in foreign direct investment fdi in pakistan

Foreign firms that are not already part of an extensive network of subsidiaries are readier to accept linkages to domestic suppliers Amendolagine et al. Indian investment in Pakistan can also benefit from several country-specific advantages. Countries with access to the sea are at an advantage to landlocked countries, who will have higher costs to ship goods. In a bid to achieve global competitiveness effectively and efficiently and to encourage industrial clusterisation2 , the Government of Pakistan passed The Special Economic Zones SEZ Act in This makes it an attractive place for outsourcing and therefore attracts investment. Clustering effects Foreign firms often are attracted to invest in similar areas to existing FDI. Evidence from Selected African Countries. In this column, I examine the prospects and challenges for Indian investment in Pakistan, and recommend policies that can create a mutually beneficial business environment for India and Pakistan. Harvard Business Review, 68 1 , Do not subsidise specific companies. Barnes, J. The government of Pakistan has put in place a policy framework on FDI that is transparent, predictable and easily comprehensible. Godart, O. Also, there will be greater confidence to invest in areas with a good track record. To achieve this, host countries cannot just wait and see what international market forces may bring to them.

In a major confidence-building measure, India overturned the ban in August Pakistan could also consider setting up a SEZ near Lahore with special incentives for investors. Existing barriers to investment in Pakistan Despite the investor-friendly FDI policy offered by the Pakistan government, investment from India has not yet entered the Pakistani market.

Targeting large investors pro-actively in particular sectors requires specific and expensive expertise on the side of the IPAs, with a professional staff to be paid at internationally competitive salaries, the costs of which could be borne by external donors.

foreign direct investment in pakistan research papers

Barnes, J. Public support should take the more general form of creating reliable infrastructure and offering specific vocational training.

Foreign investment in pakistan 2019

Small countries may be at a disadvantage because it is not worth investing for a small population. The language spoken is the same in the two Punjabs; even in the two main financial centres of the two countries - Karachi and Mumbai - Sindhi is spoken. Such innovative solutions should be complemented by an appropriate legal framework to incentivise and secure investment. The policy consolidates and liberalises existing policies by related line ministries, besides drawing up futuristic strategic programmes to implement the policy. Clusters are considered to increase the productivity with which companies can compete both nationally and globally Porter It also depends on the type of industry. The government of Pakistan has put in place a policy framework on FDI that is transparent, predictable and easily comprehensible. However, there are two major barriers that might impede investment flows from India, in particular: Lack of political stability: Political stability is extremely important for normal macroeconomic environment and business activity in a country. Without free movement of labour, there may be a greater unwillingness to invest in UK. Moreover, it should engage in after-investment care, acknowledging the demonstration effects from satisfied investors, the potential for reinvestments, and the potential for cluster-development because of follow-up investments. Policy makers may nevertheless wish to put mechanisms in place to guard their jurisdictions from the possibility of sub-optimal outcomes. On the one side, it should act as a one-stop shop for the requirements investors demand from the host country.

Donaubauer, J.

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Investment in Pakistan: Prospects and challenges for India