IMPACT OF CHINESE FOREIGN DIRECT INVESTMENT ON RECIPIENT COUNTRIES (CASE OF PAKISTAN)
DOI:
https://doi.org/10.20397/2177-6652/2024.v24i1.2760Palavras-chave:
Foreign Direct Investment (FDI), China, Pakistan, FDI impact, and economic governanceResumo
The relationship between foreign direct investment (FDI) and economic development has drawn the attention of many scholars. China has become the largest exporter of capital among the BRICS countries and at the same time China exemplifies the successful use of foreign capital as a driving force for economic prosperity. The object of this research is the economic impact of Chinese FDI on the recipient country. The research article reviews the effect of Chinese foreign direct investment on Pakistan’s economy, which has expressed interest in membership of BRICS. The research uses data from the World Bank, Ministry of Commerce of PRC, Pakistan Bureau of Statistics, China Global Investment Tracker, and other scholar resources. The methodology of the research is based on correlation modeling as well as graphical methods. The research uses a correlation model to show that Chinese FDI support the development and growth of Pakistan's economy.
The study concludes that the Chinese accumulated FDI have positive impacts on the economic development of the recipient country. However, the study found a few negative impacts of Chinese FDI on Pakistan, such as climate risks and CO2 emissions. The negative impact could be limited by strengthening control of incoming investments by Pakistan's local governments, for example, directing investments into eco-friendly projects and developing renewable energy power plants. The contribution to the research paper is that recommendations could be used in national FDI policies to control the distribution of foreign investments and to protect the national economy of recipient countries.
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