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

Khalil Hamdani ()
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Khalil Hamdani: Former Director, Investment Division, the United Nations

Lahore Journal of Economics, 2014, vol. 19, issue Special Edition, 267-281

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.

Keywords: Investment; technology; industry; Pakistan (search for similar items in EconPapers)
JEL-codes: F21 O38 O53 (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:lje:journl:v:19:y:2014:i:sp:p:267-281