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The Determinants of Foreign Direct Investment in Pakistan: an Empirical Investigation

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Author Info

  • Zahir Shah

    (Government College of Commerce, Mansehra.)

  • Qazi Masood Ahmed

    (Institute of Business Administration, Karachi and Technical Adviser at the Social Policy and Development Centre (SPDC), Karachi.)

Abstract

The changing modes of international transactions and the cross-border mobilisation of factor resources, in pursuance of transnational production, constitute new dimensions for sustained economic growth. Foreign Direct Investment (an influential element of this process) is defined as the source of acquisition of managerial control by a business enterprise of a foreign country over a business activity in a host country [Graham (1982)]. The changing perceptions and more attractive policies of the host developing nations have changed the destinations of FDI flows from industrially developed countries to high growth developing centres. FDI stock held by developing countries has risen from $ 132.95 billion in 1980 to $ 1438.48 billion in 1999. Their share in inward stock has reached to 30.14 percent in 1999 as against 26.2 percent in 1980. FDI inflows during this period were raised from $ 4.42 billion to $ 208.0 billion, at an annual growth rate of 22.5 percent while GDP growth rate for that period was 3.9 percent. FDI brings the most needed capital fund, advanced production technique, snobbish managerial skills, advertising and marketing expertise, global links and the controversial phenomenon of “transfer pricing”.1 Pakistan, the world’s 7th most populated country with 140 million people, a relatively high growth rate of GDP (averaging around 6 percent), with a significant stock of natural resources and a variety of investment provisions has remained unattractive for FDI inflows.

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Bibliographic Info

Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 42 (2003)
Issue (Month): 4 ()
Pages: 697-714

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Handle: RePEc:pid:journl:v:42:y:2003:i:4:p:697-714

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  1. Hafer, R.W. & Jansen, D.W., 1990. "The Demand For Money In The United States: Evidence From Cointegration Tests," Papers 9010, Erasmus University of Rotterdam - Institute for Economic Research.
  2. Ray, Edward John, 1977. "Foreign Direct Investment in Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 283-97, April.
  3. Scaperlanda, Anthony E & Mauer, Laurence J, 1969. "The Determinants of U.S. Direct Investment in the E.E.C," American Economic Review, American Economic Association, vol. 59(4), pages 558-68, Part I Se.
  4. Dhaneshwar Ghura & Barry Goodwin, 2000. "Determinants of private investment: a cross-regional empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 32(14), pages 1819-1829.
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Cited by:
  1. Abdul, waheed & Syed tehseen, jawaid, 2010. "Inward foreign direct investment and aggregate imports: time series evidence from Pakistan," MPRA Paper 31270, University Library of Munich, Germany.
  2. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics.
  3. Matthew McCartney, 2011. "Pakistan, Growth, Dependency, and Crisis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 71-94, September.
  4. Unbreen Qayyum & Zafar Mahmood, 2013. "Inter-linkage between Foreign Direct Investment and Foreign Trade in Pakistan: Are they Complements or Substitute?," PIDE-Working Papers 2013:91, Pakistan Institute of Development Economics.
  5. Mughal, Mazhar, 2008. "Boon or bane- role of FDI in the economic growth of Pakistan," MPRA Paper 16468, University Library of Munich, Germany.

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