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Economic viability of foreign investment in railways: a case study of the China-Pakistan Economic Corridor (CPEC)

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  • Yousaf Ali
  • Muhammad Sabir
  • Muhammad Bilal
  • Mehnab Ali
  • Arshad Ali Khan

Abstract

Pakistan Railways has faced a severe financial crisis in recent years. Pakistan has recently become a partner with China in a mega-investment project under an agreement called the China-Pakistan Economic Corridor (CPEC). Among other things, CPEC also includes a range of investments in Pakistan Railways. This particular study focuses on the analysis of US$8.2 billion investment in the upgrade and expansion of the Karachi-Peshawar railways link, which is also known as the ML-1 (Main Line 1). The study found ML-1 as economically viable with a payback period of 10 years. Furthermore, ML-1 project investment is expected to result in uplifting Pakistan Railways, mainly through an increase in freight and passenger transportation. Some risk factors may hinder the expected economic return from the CPEC investment in Pakistan Railways. These factors include consistency in the government policies, the status of the Pakistani economy in upcoming years, and law and order situations in the country. The study has a utility for the governments of both countries and larger business communities have stakes in the trade between the two countries. It is equally beneficial for the international community, businesses (both in China and Pakistan) and locals of the region associated with the CPEC infrastructure.

Suggested Citation

  • Yousaf Ali & Muhammad Sabir & Muhammad Bilal & Mehnab Ali & Arshad Ali Khan, 2020. "Economic viability of foreign investment in railways: a case study of the China-Pakistan Economic Corridor (CPEC)," The Engineering Economist, Taylor & Francis Journals, vol. 65(2), pages 158-175, April.
    • Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:158-175
    DOI: 10.1080/0013791X.2019.1668096
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    Cited by:

    1. Syed Zulfiqar Ali Shah & Muhammad Anwar & Ch. Mazhar Hussain, 2021. "Top managers' attributes, innovation, and the participation in China–Pakistan Economic Corridor: A study of energy sector small and medium‐sized enterprises," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 385-406, March.
    2. Elena Aleksandrovna Egorycheva & Nataliya Valerievna Dyuzheva & Andrey Vladimirovich Girinskiy & Ekaterina Petrovna Makarova Korobeinikova, 2020. "China-Pakistan Economic Corridor (CPEC) as a Flagship of Chinese Belt and Road Initiative," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(Special 1), pages 353-363.

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