Foreign Investment In Pakistan

be able to turn the existing trade deficit in its favour. Through improvement in communications, Pakistan can thus effectively integrate its domestic market as well as explore landlocked neighbouring markets through exports.

Completion of CPEC is likely to improve Pakistan’s economic, commercial, and geostrategic environment. As the proposed Chinese investment more than doubles all foreign direct investment in Pakistan since 2008, it will attract international investors in Pakistan. This will help to improve the perceived external image of the country, an image that is not always in line with current situations and tends to be more negative than merited by actual conditions and one that causes a psychological obstacle to the flows of foreign

It is also the most common strategy for internalization of companies from emerging countries (UNCTAD WIR, 2013). The MNEs that are prompted by market-seeking OFDI invest in most of the cases in a specific country or a nearby country in order to supply commodities. Many of these markets have previously been serviced by exports from the investing MNE. The exporting has been ended due to an imposed tariff or other cost raising barrier by a host country or the market size makes local production for economical. Market-seeking investment encases multi fold benefits that the investing company can leverage. The underlying motives vary from sustaining or protecting existing markets to exploiting or promoting new markets. The location factors of market-seeking OFDI are commonly market size, prospects for market growth and indigenous resources and capabilities. Additionally retaining competitiveness can pull investment. Furthermore, the engagement in market-seeking OFDI improves the company’s market power on local, regional and international level. Engaging in this type of strategic market-seeking investment derives often for defensive and aggressive

A common way to make strategic asset-seeking investments is through acquiring assets of foreign company in order to replenish or increase the company’s current assets. Strategic assets are often sought through merging or acquiring assets of foreign companies to gain competitive advantage in a new market and to promote long-term strategic objectives. The MNEs that are prompted by this type of OFDI are commonly established MNEs that aim for an integrated international or regional strategy, and new foreign direct investors that look for acquiring a competitive strength in a foreign market. The main motive for strategic asset seeking OFDI is to leverage of minimizing a particular cost or marketing advantages over the competing MNEs international portfolio of physical assets and skilled labour competences. Thus, strategic-asset seeking OFDI enable companies to increase their ownership-specific advantages or decline other companies’ competitiveness. The European manufacturing industry with its modernized technology has prompted Chinese investment during the recent economic crisis in Europe. The investment allows Chinese manufacturing industry to move up its’ value chain and advance their position in the domestic market. Chinese has displayed specific interest in industrial machinery and automotive industries. Companies such as Volvo, Putzmeiser and Ferretti have attracted Chinese