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Foreign Direct Investment in Pakistan
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Foreign Direct Investment in Pakistan Presentation Transcript

  • 1. Foreign Direct Investment in Pakistan
  • 2. Types of FDI• Resource Seeking FDI• Manufacturing FDI• Market seeking FDI
  • 3. FDI effect on Economic Growth• FDI may affect positively economic growth in two main ways:• augmentation of domestic investment(adds to the capital stock) and efficiency effects• (transfer of technology, marketing and managerial skills)
  • 4. FDI effect on Economic Growth• Other studies suggest that FDI does not have an independent effect on economic growth. Its effect is dependent on the initial country conditions that allows it to exploit FDI spillovers (Carkovic and Levine, 2002,Lumbila, 2005; Trevino and Upadhyava, 2003)• Trevino and Upadhyaya (2003) find that FDI is more likely to have a positive effect on economic growth in more open economies and Alfaro et al. (2004) argue that the growth enhancing effect of FDI is only possible in countries with developed financial systems
  • 5. FDI effect on Economic Growth• On the other hand, dependency theorists argue that dependence on foreign investment is expected to have a negative effect on economic growth and the distribution of income.• Bornschier and Chase-Dunn (1985) claim that foreign investment creates an industrial structure in which monopoly is predominant leading to what Ajayi (2006) refers to as an enclave economy in which local investors are excluded. As a result, countries that are wholly dependent on FDI will experience stagnation, unemployment and increasing inequality.• This is consistent with Rhagavan’s (2000) argument that FDI may have a negative effect on growth, particularly if the inflow of FDI leads to increased monopolization of local industries.
  • 6. IndicatorPakistan Name 1990 1995 2000 2005 2009 Panel A: Economy GDP (constant 2000 US$ 50 63 74 94 111 billions) GNI (constant 2000 US$ 47 61 73 90 106 billions) Panel B: Structure of Output Services, etc., value added (% 49 50 51 51 54 of GDP) Manufacturing, value added (% 17 16 15 19 17 of GDP) Agriculture, value added (% 26 26 26 21 22 of GDP) Panel C: Openness and Structure of Trade Trade Openness [Sum of exports and imports of 39 36 28 35 33 goods and services (per cent of GDP)] Manufactures exports (% of 79 83 85 82 76 merchandise exports) Foreign direct investment, net 1 1 0 2 1 inflows (% of GDP)
  • 7. Pakistan--Inward FDI Inward FDI (US$ Million) 6000 5000 4000US$ Million 3000 Inward FDI (US$ Million) 2000 1000 0 00 01 02 03 04 05 06 07 08 09Source: Investment Map
  • 8. Inward FDI– Selected Sectors Inward FDI --Selected Sectors 2500 2000 1500 Transport, storage and communicationsUS$ Million Petroleum 1000 Finance 500 0 00 01 02 03 04 05 06 07 08 09 -500 Source: Investment Map
  • 9. Inward FDI– Selected Sectors Inward FDI-- Selected Sectors 600 500 400 Food,beverages and tobacco 300 Wholesale and retail tradeUS $ Million Coke, petroleum products and 200 nuclear fuel Electricity, gas and water 100 0 00 01 02 03 04 05 06 07 08 09 -100Source: Investment Map
  • 10. Sector wise leading companies investing in PakistanIndustry Number of foreign Affiliates Sales (US$ Million)Employees Leading parent company Leading home countryAll Sector 206 25475.6 92118ROYAL DUTCH SHELL PLC , GBR United StatesWholesale and retail trade 53 10253.1 31827MITSUI & CO., LTD. , JPN United StatesTransport, storage and communications 26 840 6138Deutsche Post AG , DEU GermanyBusiness activities 26 33926BP P.L.C. , GBR United StatesChemicals and chemical products 26 746.9 18606Akzo Nobel N.V. , NLD United StatesFinance 23 7319.6 42767STANDARD CHARTERED PLC , GBR United StatesOther services 15 27220Weatherford International Ltd. , CHE United StatesFood,beverages and tobacco 9 6122BRITISH AMERICAN TOBACCO P.L.C. , GBR United KingdomNon-metallic mineral products 7 666.1 2005Beltexco Limited , HKG RomaniaElectricity, gas and water 7 115RANHILL BERHAD , MYS United KingdomMachinery and equipment 6 2814.1 712Cedar I Holding Company, Inc. , USA SwedenOther manufacturing 5 666.1 612Cedar I Holding Company, Inc. , USA SwitzerlandMetal and metal products 5 413General Motors Company , USA United StatesHotels and restaurants 5 1295Marriott International, Inc. , USA United StatesConstruction 4 3501.8 General Motors Company , USA United StatesMotor vehicles and other transport equipment 4 2814.1 700HONDA MOTOR CO., LTD. , JPN JapanTextiles, clothing and leather 4 224YKK CORPORATION , JPN United StatesPetroleum 4 1300Azzurra Holding Corporation , USA United StatesElectrical and electronic equipment 3 382Imation Corp. , USA United StatesCommunity, social and personal service activities 3 27200United Nations Population Fund , USA United StatesPrecision instruments 2 12Cedar I Holding Company, Inc. , USA United StatesRubber and plastic products 2 12Beltexco Limited , HKG United StatesPublishing, printing and reproduction of recorded media 2 14Georg von Holtzbrinck GmbH & Co.KG , DEU United StatesCoke, petroleum products and nuclear fuel 2 631SAVOLA GROUP COMPANY , SAU Saudi ArabiaHealth and social services 1 United Nations Population Fund , USA United StatesMining and quarrying 1 Chevron Corporation , USA United StatesWood and wood products 1 TEHNO INDUSTRIAL S A , ROM RomaniaPublic administration and defence 1 Government of The United States , USA United StatesEducation 1 11 Oracle Corporation , USA United States Source: Investment Map
  • 11. Pakistan—Food& Beverage Sector leading foreign investors #. Parent Company Parent country Number Total : 9 1 BRITISH AMERICAN TOBACCO P.L.C. United Kingdom 4 2 Nestlé S.A. Switzerland 2 3 Corn Products International, Inc. (Rafhan) United States 1 4 Monsanto Company United States 1 5 CADBURY LTD United Kingdom 1Source: Investment Map
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