IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Foreign Direct Investment in Pakistan: Policies and Trends

Listed author(s):
  • Ashfaque H. Khan

    (Pakistan Institute of Development Economics, Islamabad.)

Registered author(s):

    Recent years have seen a sharp change in the attitude of developing countries regarding Foreign Direct Investment (FDI).. The growing balance-of-payments difficulties as well as the decline in concessional aid live forced many developing countries to reassess their stances on FDI and to take substantial unilateral steps to liberalise their inward FDI regimes. In spite of liberalising the inward FDI regime, tempering or removal of obstacles to foreign investors, and according liberal incentives, Pakistan's has been a lacklustre performance in attracting FDI. This paper attempts to find out the reasons why Pakistan has not been able to attract sufficiently large FDI despite liberalisation measures. The analysis identifies a number of factors responsible for low FDI in Pakistan. These include the lack of political stability particularly during the last eight years, and unsatisfactory law and order situation particularly in the, city of Karachi, the largest industrial and commercial centre and the only port of the country. The macroeconomic imbalances and the slowing down of economic activity together with inconsistent economic policies have also discouraged foreign investors to increase their participation in Pakistan. The slow bureaucratic process, inappropriate business environment, and inadequate infrastructure facilities have played their role in discouraging foreign . investors to undertake investment initiative in Pakistan. The lack of trained, educated, and disciplined labour force, along with complicated and overprotective labour laws, have inhibited business expansion and frightened away productive investment. The cultural and social taboos as well as the quality of life are not conducive to attracting foreign investors to Pakistan. The lack of welcome to foreign investors by government agencies and officials has also been a problem.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

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

    Volume (Year): 36 (1997)
    Issue (Month): 4 ()
    Pages: 959-985

    in new window

    Handle: RePEc:pid:journl:v:36:y:1997:i:4:p:959-985
    Contact details of provider: Postal:
    P.O.Box 1091, Islamabad-44000

    Phone: (92)(51)9248051
    Fax: (92)(51)9248065
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:36:y:1997:i:4:p:959-985. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.