Source world development indicator in Pakistan Essay

Table 01 FDI Net inflow in Pakistan (19702000)
Period 197074 197579 198084 198589 199099 2000
Value ($ millions) 41 138 322 764 5009 308
% GCF 0.53 0.98 1.22 2.31 4.75 3.17
Source world development indicator
In the era of 1970s the trade policy of Pakistan have been swung between import substitution and export promotion. In early 70s Pakistan went to nationalization policy and become the biggest player in the economy. In 90s Pakistan changed the strategy and opened its economy to allow the foreign investors to invest in.
1n 1960s the marked role of local and private sector in terms of major services of insurances, banking and commerce slowed down the foreign investment. The foreign investment was restricted in the areas of banking, commerce, and insurance in early 60s. In 70s the foreign investors were badly effects due to nationalization policy and extreme regulation of commerce and trade from the government side.
The nationalization policy could not bring the desired results to the government in terms of economic growth and activity of the economy. Due to the failure of nationalized organizations the government softened the strategy and allowed the foreign investors to invest in the country. At the beginning stage the investors was only allowed in participating joint equity participation with domestic investors and targeting multiple areas like technical skills, advanced technology and marketing knowledge. In 1980s government showed additional interest and introduced Export Promotion Zone (EPZ) to facilitate exportoriented industries. However, government encouraged to the overseas Pakistan to send their investments in Export Promotion Zone (EPZ) on non repairable speculation basis.
The results of the services provided by the government diminished because of the highly strict policies and laws. The restrictions included strict licensing, high public ownership, hug taxes imposition and price control from government of Pakistan. In the end 80s and early 90s Pakistan tried to control these barriers and give free hand to investors to invest in, providing effortless relaxing policies for licensing and registration and for starting new business which is given to the local or domestic investors. Liberalization, of foreign exchange also encourages FDI in Pakistan because foreign investors were given space to invest in, posses and take out the foreign currency and hold certificates of foreign currency.
Special Industrial Zones (SIZs) were also another milestone in the Pakistan history. In SIZs the overseas Pakistanis and foreign investors were appreciated to participate. In New investment policy agriculture and services sector was also allowed to participate in it which was not before allowed in foreign investment. This policy has improved the FDI policy in Pakistan.
As mentioned by the investment board of Pakistan the magnitude of FDI in 20002001 was 485$ million and it consistently increased in next six (06) years. In 20072008 it reached figure of $5409 million. In 20112012 it starts decreasing. There are multiple of reasons behind the declined of FDI inflows. The most important is the global financial crises, political instability and terrorist attacks. The inflow of FDI is shown below in Table2