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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. Indicator
Pakistan 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
4000
US$ Million
3000
Inward FDI (US$ Million)
2000
1000
0
00 01 02 03 04 05 06 07 08 09
Source: Investment Map

8. Inward FDI– Selected Sectors
Inward FDI --Selected Sectors
2500
2000
1500
Transport, storage and
communications
US$ 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 trade
US $ Million
Coke, petroleum products and
200 nuclear fuel
Electricity, gas and water
100
0
00 01 02 03 04 05 06 07 08 09
-100
Source: Investment Map

10. Sector wise leading companies investing in Pakistan
Industry Number of foreign Affiliates Sales (US$ Million)Employees Leading parent company Leading home country
All Sector 206 25475.6 92118ROYAL DUTCH SHELL PLC , GBR United States
Wholesale and retail trade 53 10253.1 31827MITSUI & CO., LTD. , JPN United States
Transport, storage and communications 26 840 6138Deutsche Post AG , DEU Germany
Business activities 26 33926BP P.L.C. , GBR United States
Chemicals and chemical products 26 746.9 18606Akzo Nobel N.V. , NLD United States
Finance 23 7319.6 42767STANDARD CHARTERED PLC , GBR United States
Other services 15 27220Weatherford International Ltd. , CHE United States
Food,beverages and tobacco 9 6122BRITISH AMERICAN TOBACCO P.L.C. , GBR United Kingdom
Non-metallic mineral products 7 666.1 2005Beltexco Limited , HKG Romania
Electricity, gas and water 7 115RANHILL BERHAD , MYS United Kingdom
Machinery and equipment 6 2814.1 712Cedar I Holding Company, Inc. , USA Sweden
Other manufacturing 5 666.1 612Cedar I Holding Company, Inc. , USA Switzerland
Metal and metal products 5 413General Motors Company , USA United States
Hotels and restaurants 5 1295Marriott International, Inc. , USA United States
Construction 4 3501.8 General Motors Company , USA United States
Motor vehicles and other transport equipment 4 2814.1 700HONDA MOTOR CO., LTD. , JPN Japan
Textiles, clothing and leather 4 224YKK CORPORATION , JPN United States
Petroleum 4 1300Azzurra Holding Corporation , USA United States
Electrical and electronic equipment 3 382Imation Corp. , USA United States
Community, social and personal service activities 3 27200United Nations Population Fund , USA United States
Precision instruments 2 12Cedar I Holding Company, Inc. , USA United States
Rubber and plastic products 2 12Beltexco Limited , HKG United States
Publishing, printing and reproduction of recorded media 2 14Georg von Holtzbrinck GmbH & Co.KG , DEU
United States
Coke, petroleum products and nuclear fuel 2 631SAVOLA GROUP COMPANY , SAU Saudi Arabia
Health and social services 1 United Nations Population Fund , USA United States
Mining and quarrying 1 Chevron Corporation , USA United States
Wood and wood products 1 TEHNO INDUSTRIAL S A , ROM Romania
Public administration and defence 1 Government of The United States , USA United States
Education 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 1
Source: Investment Map

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