Fdi in Pakistan

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Contents
LETTER OF ACKNOWLEDGEMENT1
EXECUTIVE SUMMARY2
INTRODUCTION3
WHAT IS FDI?3
CLASSIFICATION OF FDI3
CLASSIFIATION OF A FOREIGN INVESTOR3
IMPORTANCE OF FOREIGN DIRECT INVESTMENT TO A COUNTRY3
INCENTIVES OF FDI4
FDI AND THE CURRENT SITUATION GLOBALLY5
FDI Flow6
FOREIGN DIRECT INVESTMENT IN PAKISTAN7
TRADE TRENDS IN PAKISTAN9
FDI IN PAKISTAN (THE CURRNET SITUATION)9
STRUCTURAL PATTERN OF FDI IN PAKISTAN13
CONCLUSION AND RECCOMENDATIONS14
REFERENCES19

LETTER OF ACKNOWLEDGEMENT

It has been a pleasure to be Mr. Sharique Ayubi’s student. I would like to thank him for giving us the chance to prepare a financial institutions report. His lectures have been very interesting and motivating. I am extremely grateful to him and appreciate his efforts for providing us full support, encouragement and valuable guidance.

Sincere regards,
SANNA SARWAR (7896)

EXECUTIVE SUMMARY

This report highlights the importance of FDI in Pakistan. Pakistan has currently been in global limelight due to it’s assistance and support to the American government against the Taliban’s. But this has coasted the country a lot economically, it’s social structure is almost shaken by the blasts and uncertainty in the country. Like any other economics factor FDI has also been adversely affected especially in the past two years. This report mentions the structural pattern of FDI in Pakistan and gives out some of the possible recommendations to improve FDI inflows. The aim of this report is to make the reader aware of the importance of the Foreign Direct Investment to any country and then specifications has been made to Pakistan. The facts have been supported by data taken from authentic sources and comparison has been made of FDI inflows over the year.

INTRODUCTION
WHAT IS FDI?
Foreign direct investment (FDI) refers to long term participation by country one country into another country. It is foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization and also usually involves participation in management, joint-venture, transfer of technology and "know-how". CLASSIFICATION OF FDI

There are two types of FDI:
* inward foreign direct investment: investment of foreign capital occurs in local resources ; * Outward foreign direct investment: It is also referred to as “direct investment abroad”. In this case it is the local capital, which is being invested in some foreign resource. These result in a net FDI inflow (positive or negative).

Foreign Direct investment may be further classified as: GREEN FILED INVESTMENT and AUQUISITIONS and MERGERS. Greenfield investments involve the flow of FDI for either building up of new production capacities in the host nation or for expansion of the existent production facilities of the host country. The plus points of this come in form of increased employment opportunities, relatively high wages, R&D activities and capacity enhancement. Multinationals mostly rely on mergers to bring in FDI. FDI flow through acquisitions does not render any long run advantage to the economy of the host nation as under Greenfield investments.

Some other types of foreign direct investment in vogue are termed as Horizontal FDI, Forward Vertical FDI, Vertical FDI and Backward Vertical FDI.

CLASSIFIATION OF A FOREIGN INVESTOR
A foreign direct investor may be classified in any sector of the economy and could be any one of the following: an individual; a group of related individuals; an incorporated or unincorporated entity; a public company or private company; a group of related enterprises; a government body; an estate (law), trust or other societal organization; or any combination of the above. IMPORTANCE OF FOREIGN DIRECT INVESTMENT TO A COUNTRY

The Asian currency crisis that erupted in Thailand in July 1997 and has since spread to other countries, particularly...
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