The political environment also needs improvement so that more FDI is attracted
KARACHI: Pakistan has been facing devastating forms of terrorism for two decades, which gave rise to a high number of internally displaced persons (IDPs), thus increasing unemployment and impacting the economy. A decline in GDP growth, reduction in investment, lost exports, unemployment and the depreciation of incomes and unfavourable exchange rate, are the most affected areas of Pakistan’s economy. It has limited foreign direct investment (FDI), which is crucial for Pakistan’s economic growth. It increases employment, strengthens industrial sector, improves balance of payments, finances development projects, improves foreign exchange reserves and in a nut shell, FDI is one of the main sources to achieve high economic growth. Due to the war against terrorism, Pakistan is unable to attract more inflow of FDI.
Terrorism has also promoted smuggling along the porous borders. It has terribly damaged infrastructure, making foreign and domestic trade very difficult. Due to terrorism, businessmen migrate to different European, American and Central Asian countries in order to start their businesses there every year. This indirectly affects the industrial sector of the country.
Policymakers should take tangible measures in order to reduce the cost of war against terrorism and improve the security situation in the country. The political environment also needs improvement so that more FDI is attracted. Finally, the exchange rate of the Pakistani rupee should be strengthened to also attract foreign investors so we can gain economic stability.
Tuba Seher
Published in The Express Tribune, October 24th, 2016.
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