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MGT604 - Management of Financial Institutions - Lecture Handout 14

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INCREASING FOREIGN DIRECT INVESTMENT

Pakistan must increase Foreign Direct Investment, if it intends to enhance the growth of its economy. The experience of the developing countries is that FDI is directly related to economic growth. Two recent examples from the developing world are China and India.

The following factors have proven to be critical for attracting foreign investment:

  1. World-class physical infrastructure
  2. A secure law and order situation
  3. Skilled and productive labor
  4. Innovative capacities
  5. Agglomeration of efficient suppliers, competitors
  6. A well-developed institutional infrastructure

Foreign Interest in Local Financial Markets

With the rapid growth in Pakistan's economy, foreign investors are taking a keen interest in the corporate sector of Pakistan. In the recent years, majority stakes in many corporations have been acquired by multinational groups.

Enhancing and Sustaining a Growing GDP

There have been two problems with the GDP growth rate in Pakistan. First, Pakistan has not been able to sustain growth over the long term. Sometimes Pakistan grows at a rate of around 7 percent and sometimes it retreats to a 3 percent growth rate.
Second, the growth rate of the economy in Pakistan has not been linked to improvement in human development factors. Basic indicators like education, health, poverty, safe drinking water, etc., have been neglected in Pakistan. The "trickle down theories" and market forces of the 1970s and 1980s have failed to provide relief for the general public. A need exists to link the growth rate of the economy to improvement in human development. The basic argument is that a higher growth rate is of limited utility if it does not benefit the population as a whole, including the poor.

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MGT604 - Management of Financial Institutions - Lecture Handout 07

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STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS

Agricultural Credit Department

Established under Section 8(3) of SBP Act 1956, is mainly responsible to meet credit needs of agriculture that being the mainstay of Pakistan’s economy generates nearly one fourth of the total out put and 44% of total employment and is the major source of foreign exchange earning.

  • To operate as a focal point in SBP for all agriculture and rural finance policies, programs and projects.
  • To assess/estimate the credit needs of farm & non farm sector in rural areas.
    To review the issues and challenges faced and developments taking place in agriculture and rural finance both in the country and elsewhere to develop an adequate knowledge and information base for policy formulation etc
  • To formulate agri & rural finance policies in consultation with stakeholders to ensure adequate flow of institutional credit in rural areas.
  • To monitor growth and trends in agri /rural finance portfolio of banks & financial institutions.
  • To collect periodical agri/rural finance data for analysis, policy formulation and dissemination to general public.
  • To advise Federal and Provincial Governments, Banks, Cooperative Banks & agriculture chambers on agri & rural finance issues.
  • To initiate and undertake information dissemination and awareness building programs for farmers and special training programs for commercial banks.
  • To build SBP rural and agriculture finance capacity
  • To operate as a Secretariat for Agriculture Credit Advisory Committee (ACAC)

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