FOREIGN direct investment (FDI) has been considered a tool of economic growth. Most developing countries rely on FDI.

The potential advantages of the FDI on the host economy are: it facilitates utilisation and exploitation of local raw material; introduces modern techniques of management and marketing and eases the access to new technologies. While foreign inflows can be used for financing current account deficits, finance flows in the form of FDI does not generate repayment of principal and interests (as opposed to external debt).

Pakistan has now emerged as a favourite destination for foreign investors, both direct and portfolio investment. So far investments have remained confined to our productive sectors as compared to the service sector.

Here it is the government’s responsibility to concentrate on infrastructure development, encourage local entrepreneurs, create a stable macroeconomic environment and ensure opportunities that would be conducive to investors.

Neha Islam

Karachi

Published in Dawn, December 11th, 2017