Fdi in Pakistan

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Contents LETTER OF ACKNOWLEDGEMENT 1 EXECUTIVE SUMMARY 2 INTRODUCTION 3 WHAT IS FDI? 3 CLASSIFICATION OF FDI 3 CLASSIFIATION OF A FOREIGN INVESTOR 3 IMPORTANCE OF FOREIGN DIRECT INVESTMENT TO A COUNTRY 3 INCENTIVES OF FDI 4 FDI AND THE CURRENT SITUATION GLOBALLY 5 FDI Flow 6 FOREIGN DIRECT INVESTMENT IN PAKISTAN 7 TRADE TRENDS IN PAKISTAN 9 FDI IN PAKISTAN (THE CURRNET SITUATION) 9 STRUCTURAL PATTERN OF FDI IN PAKISTAN 13 CONCLUSION AND RECCOMENDATIONS 14 REFERENCES 19

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.
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The crisis poses many challenges to developing countries, including how to best supervise financial institutions, how to efficiently manage foreign exchange reserves/systems, and how to prudentially manage foreign debt and investments. From the viewpoint of foreign resource mobilization, these crises highlighted the urgent need to re-examine the optimal combination of foreign capital, i.e. proper composition of concessional public loans, commercial loans, portfolio investment, and foreign direct investment. This underscores the importance of FDI in the developing member countries (DMCs), particularly the group of least developed DMCs where domestic financial markets are fragile and liquidity is limited.
The significance of foreign direct investment (FDI) flows is well documented in literature for both the developing and developed countries. Over the last decade foreign direct investment has grown at least twice as rapidly as trade (Meyer, 2003). As there is shortage of capital in the developing countries, which need capital for their development process, the marginal productivity of capital is higher in these countries. On the other hand investors in the developed world seek high returns for their capital. Hence there is a mutual benefit in the international movement of capital. The ongoing process of integration of the world economy and liberalization of the
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