What is investment and FDI ? analysis of investment in pakistan?

1. INVESTMENT ANALYSIS!!

2. INVESTMENT !!
“An asset or item that is purchased with the
hope that it will generate income or
appreciated in the future”

3. COUNTRIES SNAPSHOT

4. TYPES OF INVESTMENT!!
There are two determinants of investment :
• Marginal Efficiency of Capital (MEC).
• Rate of interest.

5. INVESTMENT RESOURCES!!
• In a closed economy the major resources of
investment is savings whether it is from
individuals, firms or government.
• In open economy the major resource of
investment is borrowings for necessities from
neighboring countries

6. REASONS OF RISE AND FALL OF
INVESTMENTS!!
Interest rate
Output prices
Taxes

7. WHY INVESTMENT RISES?
• Investment rises when country’s interest rate
is low and economic situation is at sustain
level.
• This tends to encourage investment spending
into the circular flow of income.
• This leads to higher aggregate demand (AD)
and economic growth.

8. INVESTMENT IN PAKISTAN??

9. INVESTMENT FROM 2000-2007
From 2000 to 2007 Pakistan’s economy faced a roller
coaster experience.
• For the year 2000 to 2004 Pakistan’s economy
moving steadily growth but agriculture sector faced
significant downfall due to flood.
• Non-economic factors pulled investment and
resulted in a net increase of 754 million rupees in its
investment in 2004.
• Where as in 2005-2007 Pakistan’s economy was
largely boomed due to the involvement of mega
sector that is the telecommunication sector.

10. • From 2000 to 2013 Pakistan’s economy a roller
coaster experience.
• For the year 2000 to 2004 Pakistan’s economy for
moving steadily growth but agriculture sector faced
significant downfall due to drought but …
• non-economic factors pulled investment and resulted
in a net increase in of 754 million rupees in its
investment from 2004.
• Where as in 2005-2007 Pakistan’s economy was
largely boomed due to the involvement of mega
sector that is the telecommunication sector.

11. INVESTMENT FROM 2008-2013
•The year 2008-09 has been a difficult Era for Pakistan’s economy,
because investment rate was declined in this Era.
•In 2010-12 we lose investor in growth and investment sector,
because of political situations.
•In 2012-13 Pakistan’s economy continued to face challenges like
energy shortages, floods and rains, poor law and order situation.
•At the start of 2013, the country remains in a low growth mode.
The reason behind this was , law and order situation of the
country, and terrorism

12. FOREIGN DIRECT INVESTMENT!!
Foreign direct investment (FDI) generally refers
to how a company decides to expand its
operations to a foreign country by making
either acquiring an existing business in the
foreign country or by building a new
subsidiary.
Example:- Japanese company ; Toyota has opened a
plant in Karachi ; so Pakistan is consider as Foreign
Direct Investment.

13. FDI Advantages:
Larger inflows of foreign investments are needed for the country
to achieve a sustainable high trajectory of economic growth.
Some Advantages of FDI:-
 Advanced technologies
 Employment opportunity
 Increasing productivity
 Fills trade gap
 Innovation
 Increasing Govt revenue.

14. FDI sector wise ($ in millions) in 2014
568.1
465.1
156.8
88.4 87.4
241.5
600
500
400
300
200
100
0
Telecommunication Oil & Gas Financial business Chemicals Foods Other

15. FDI FLOWS !!

16. IF WE DONOT INVEST, THEN?
 If we do not invest, we can’t earn anything on
cash
 Second, the purchasing power of cash
diminishes in inflation
 This means that if savers do not invest their
savings, they will not only lose possible return
on their savings, but will also lose value of
their money due to inflation

17. UNDERSTANDING THE INVESTMENT
DECISION PROCESS!!
• The basis of all investment decisions is to earn
return and assume risk
• By investing, investors expect to earn a return
(expected return)

18. FLUCTUATIONS !!!

19. PAKISTANI ECONOMY!!
The reasons behind the enormous fluctuations in Pakistan
economy are:
• Internal political dispute.
• Slow growth in economy.
• Worse law and order situation.
• And poor infrastructure.

20. HOW ECONOMY BOOST!!
Primarily Pakistan needs to the following:
• Stabilize the political instability
• Improve law and order situation.
• Improvise the infrastructure building highways etc.
• As it is said that Asia is the next century leader. Therefore,
Pakistan should attract Asian investors more..

21. CONCLUSION!!
“TACKLE THE MACRO CHALLENGES”

22. Q &A (SESSION)