Foreign Direct Investment

1561 Words7 Pages
For growing economies, Foreign Direct Investment (FDI) has momentous advantages over equity and debt capital flows. Most of the foreign firms that start their conduct of business in other countries, they not only come with capital but transfer modern technology, promote human capital by training the host country’s employees according to the change of technology to those countries, and this is the key for the development of the host country. According to author Direct Investment replicates aspire of acquiring an enduring awareness by an inhabitant body of one economy that is the direct investor in a venture that is occupier in another economy which is called the direct investment enterprise. The “lasting interest” entails the continuation…show more content…
In this case FDI enables countries to manage their problems arising out of escalating external debt by providing an alternative source of long-term financing. Secondly FDI has the potential of meeting the domestic resource gaps of developing countries, thereby, enhancing their growth prospects. It is based on the argument that the long-term view of benefits arising out of FDI is based on the perception that such inflows of capital acts as 'engines of growth' in developing countries. Due to increased inflow of the foreign investment the level of capital formation raises that significantly contributes to the countries' growth processes (Dhar & Roy, 1996). 1.1. Objectives of the Study In general the purpose of conducting this study is to make awareness that how Foreign Direct Investment can influence the economy of any country. This discussion can be held by investigating the following questions: • To analyze the mold of Foreign Direct Investment in Pakistan • To discover the role of FDI in the economic growth of Pakistan • To learn the determinants of FDI to Pakistan and its role on economic growth of Pakistan. • To investigate the role of international trade in economic growth and what are the distinct effects of imports and exports on economic growth • To study the changes since 1980s till 2009 and their impact on economic growth, FDI and
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