This is apropos a Business Recorder op-ed “FDI: disastrous policies” carried by the newspaper yesterday. The writer, Syed Shabbar Zaidi, appears to be a mine of information insofar as Pakistan’s economic history is concerned. Unfortunately, however, his argument in relation to foreign direct investment (FDI) betrays his lack of true appreciation, if not understanding, of how FDI plays out in the context of developing economies and emerging markets.
According to him, for example, “In the first phase that began in the 1950s and ended in the 1970s the policies were better than those in the subsequent period or periods.” In my view, however, FDI was never a success story in Pakistan; the rule of Gen Musharraf was an exception during which the FDI inflows were quite high. The writer appears to have lost sight of a key fact that one of the major impediments to FDI in Pakistan has been unwarranted judicial activism.
That the Supreme Court headed by the then Chief Justice Iftikhar Mohammad Chaudhry had immensely hurt the country’s FDI prospects through its notorious judgement in the Reko Diq case is a fact. The foreign investor’s lasting interest in a developing economy clearly shows that FDI is not merely the transfer of funds.
In other words, FDI is not foreign portfolio investment per se. Three of the major benefits of FDI are that it infuses new technology in developing nations, creates more jobs and opportunities and facilitates economic growth.
Kalb-e-Abbas (Karachi)
Copyright Business Recorder, 2023
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