Some Aspects Of Direct Foreign Private Investment In Pakistan (Notes and Comments)

Foreign private investment is either direct or portfolio, the functional difference being that the former involves control of the company while the latter does not. Sometimes direct investment is denned as that which entails the acquisition of majority participation in companies and portfolio investment as minority participation or non-participating shares. ln Pakistan direct foreign private investment takes various forms like sub-sidiaries, branches and joint ventures. There have been few systematic analyses of the impact of foreign private investment on the economy of the recipient country. The reason is that while immediate or direct impact is easily established, the indirect effects on output, employment, balance of payments and technology are difficult to identify and measure. The purpose of the present note is rather modest: to look into the relative efficiency of foreign firms in Pakistan and the extent to which they influence the market structure.