Chapter No.1

 Chapter No.1

1.  Introduction

In the world FDI increase by the last few years. In the developing countries bear the lacking of capital and advance technology, in the developing countries low level of growth rate as compare to advanced countries.

Irfan and Yasir (2006) determined that with the help of capital and advance technology the multinational corporation’s (MNC) are invest  in developing countries ,the aims of MNC is increasing the productivity.

 There are many problems in developing countries, like as in Pakistan budget deficit, pressure of the population, political environment and high inflation rate. Azam and Naeem (2007) suggested that advance technology innovation, movement of capital and changed the life style create due to the FDI.

The investment may be used in some of ways. It means stock or bond purchased to attain particular financial goals. Investment may be real or financial investment.FDI can play important role in the achieving fast economic growth in the developing countries. International capital flows is very important form of the FDI. FDI is determining to the source of technology in the period. FDI and growth rate is positive relationship if FDI increase then growth and GDP automatically increasingly. One of the most important factors is environment, if environments are better for the foreign investor then he take interesting to his goal. Productivity may be increasing when FDI ratio increase. If we talk about the developing countries they increase the saving and attain economic growth with the help of FDI.  In the developing countries FDI control the budget deficit in any economy. FDI is mostly related to the fiscal policy, if fiscal policy wants that disrupt to the investment. Economic development of a country involves of resources for increasing productive capacity. In the Pakistan economy resources are not fully utilize by the shortage of national capital. Foreign direct investment is key pillar of supports economic growth and budget surplus. It has also been show that FDI work as means of addition developing countries into the global market place.

Investment in any form that brings an output of returns in any economy may be on national level or international level. The present situation is that foreign direct investment (FDI) is a component of international economics. In developing countries like as, Pakistan are in requiring of international investor whether they come and investment to his country. Before in 1980, the Government of Pakistan has initiated marketplace based on economic reform policies. Dunning (2002) estimated that in developed countries FDI depends upon the government policies, like as infrastructure of the host nation. The previous is subject to tax incentive as well as difference of a variety of forms. Different economic factors encourage inward FDI. These include GDP, import, export and consumer price index. 

Paper plane of this study is five chapter, first is introduction, second is literature review, third one is methodology, fourth result and last one  is conclusion.

The  plane of study is divided into five categories that  first one is introduction, second one is literature review, third is methodology, fourth one is  empirical result and last is conclusion that is following.