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Foreign Direct Investment and Technological Capabilities: The Relevance of the East Asian Experience for Pakistan

Author

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  • Khalil Hamdani

    (Former Director, Investment Division, the United Nations)

Abstract

This paper makes the case for a vigorous policy thrust to support investment-led growth. Pakistan’s economy has not maintained a sufficient level of capital formation to sustain growth over the long term. Two thirds of current growth is driven by consumption and not investment: this needs to be turned around. The government needs to put in place an investment regime that motivates and induces industry to invest, innovate, and reinvest. Foreign direct investment can play an important role in strengthening the country’s investment rates. There is also need for deliberate polices to boost technological capabilities in the enterprise sector. In this context, East Asia – which successfully created a dynamic process of capital formation and technological learning that upgraded its productive capacity and underpinned export success – holds important lessons for Pakistan.

Suggested Citation

  • Khalil Hamdani, 2014. "Foreign Direct Investment and Technological Capabilities: The Relevance of the East Asian Experience for Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 267-281, September.
    • Handle: RePEc:lje:journl:v:19:y:2014:i:sp:p:267-281
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    References listed on IDEAS

    as
    1. G. F. Papanek, 1964. "Industrial Production and Investment in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 4(3), pages 462-490.
    2. Rashid Amjad, 2014. "Pakistan’s Growth Spurts and Reversals: A Historical Perspective," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 91-104, September.
    3. World Bank, 2014. "World Development Indicators 2014," World Bank Publications - Books, The World Bank Group, number 18237.
    4. Sanjaya Lall & Shujiro Urata (ed.), 2003. "Competitiveness, FDI and Technological Activity in East Asia," Books, Edward Elgar Publishing, number 2837.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Inayat U. Mangla & Muslehud Din, 2015. "The Impact of the Macroeconomic Environment on Pakistan’s Manufacturing Sector," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 241-260, September.
    2. Khalil Hamdani, 2015. "Globalization: The Challenge for Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 225-240, September.

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    More about this item

    Keywords

    Investment; technology; industry; Pakistan;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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