Foreign Direct Investment in Pakistan

1. Foreign Direct Investment (FDI)
Prepared by: Abdul Waqar Khan

2. FDI stands for Foreign Direct Investment. FDI is an investment made
by a firm or individual in a country into business interest located in
another country.

3. KINDS OF FDI
1. Horizontal FDI: Establishing the same type of business in another country.
2. Vertical FDI: Investment is made within the supply chain, but not directly in
the same industry.
3. Conglomerate FDI: This investment is made in a completely different
industry.

4. FDI INFLOW
Years
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Inflow US $ Billion
2.02
1.33
0.86
1.33
1.89
1.67
2.58
2.50
1.74
2.22
$2.02
$1.33
$0.86
$1.33
$1.89
$1.67
$2.58
$2.50
$1.74
$2.22
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
FDI Inflow (B$)

5. FDI Policies of Pakistan
Policy for Manufacturing and Industrial Sector:
Foreign investors are allowed to hold 100% equity of industrial projects. No Government sanction is
required except for the following busines sector.
“Arms and Ammunition, High Explosives, Radioactive Substance, Security printing,
Currency and Alcoholic beverages or liquors”.
Policy for Non-Manufacturing Sector:
Foreign investors are allowed to hold 100% equity. Where registration of a company in Pakistan is
required for a non-manufacturing project, intimation should be given to the State Bank of Pakistan.
Investment Policy for service Sector:
FDI in a service sector is allowed in any activity subject to obtaining permission or licence from the
concerned agency. Foreign investors may hold 100% equity and the minimum amount of foreign
investment in the project shall be 0.15 million dollar.

6. Graph Presentation
“ This Graph is showing
the postive relation
between FDI & GDP
rate”
Data Analysis
FDI Impacts on Macroeconomic Variables
Years 2013 2014 2015 2016 2017 2018 2019
FDI inflow $ 1.33 B $ 1.89 B $ 1.67 B $ 2.58 B $ 2.50 B $ 1.74 B $ 2.22 B
GDP rate 0.58 0.77 0.62 0.92 0.82 0.55 0.80
1. FDI Impacts on GDP Rate:
Graph:
0
0.5
1
1.5
2
2.5
3
2013 2014 2015 2016 2017 2018 2019
FDI INFLOW ($B) GDP RATE

7. 2. FDI impact on Unemployment Rate
Years 2013 2014 2015 2016 2017 2018
FDI inflow $ 1.33 B $ 1.89 B $ 1.67 B $ 2.58 B $ 2.50 B $ 1.74 B
Unemployment rate 2.95 1.83 3.57 3.79 3.95 4.08
Graph Presentations
“This graph is
showing the negative
relation between FDI
& Unemployment
rate”.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014 2015 2016 2017 2018 2019
FDI inflow $ US B Unemployment rate

8. Conclusion
This study has examind the importance of FDI & its impact on
macroeconomic variables.
FDI plays a significant role in economic growth and reduction in
Unemployment rate. Due to inflow of FDI more employment
opportunities will generate which could benefit Pakistan’s economy.

9. Recommendations
• The Government should improve infrastructure facilities,
overcome on energy crises & provide a peaceful environment
to investors.
• The Government should focus on unemployment rate
reduction in Pakistan.
• The Government should ensure there is good monetary and
fiscal policy to grow the economy.
• The Government needs to utilize its foreign investment &
managed prudently.
• The Government should reduce the tax rates for foreign
investors.

10. References
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study of Pakistan. IBT Journal of Business Studies (JBS), 6(2).
• Saqib, N., Masnoon, M., & Rafique, N. (2013). Impact of foreign direct investment on the economic growth of
Pakistan. Advances in Management & Applied Economics, 3(1), 35-45.
• Rahman, Z. U. (2014). impact of Foreign Direct investment on Economic Growth in Pakistan. Journal of Economics
and Sustainable Development, 5(27).
• Zeb, N., Qiang, F., & Sharif, M. S. (2014). Foreign direct investment and unemployment reduction in
Pakistan. International Journal of Economics and Research, 5(02), 10-17.
• Ali, S. (2014). Foreign capital flows and economic growth in Pakistan: empirical analysis. Ali Sharafat (2014).
Foreign Capital Flows and Economic Growth in Pakistan: Empirical Analysis. World Applied Sciences Journal, 29(2),
193-201.
• Akbar, M., & Akbar, A. (2015). An empirical analysis of foreign direct investment in Pakistan. Studies in Business and
Economics, 10(1), 5-15.
• Hussain, S., Ahmad, W., Qamar, Y., & Akram, M. S. (2019). Impact of Inflation, CO2 Emissions and Foreign
Investment in Economic Growth: A Case of Pakistan. Asian Development Policy Review, 7(4), 307-317.
https://www.researchgate.net/publication/227654650_The_Relationship_between_GDP_and_Unemployment_Evidence_
from_MENA_Countries
https://www.researchgate.net/publication/227654650_The_Relationship_between_GDP_and_Unemployment_Evidence_
from_MENA_Countries
https://www.bqrnd.com/unemployment-and-inflation-rate-in-pakistan/