Exploring the Link between Foreign Direct Investment (FDI), Industrial Policy & Trade Policy: A Case Study of Pakistan
DOI:
https://doi.org/10.55737/trt/v-iv.310Keywords:
Foreign Direct Investment, Industrial Policy, Trade Policy, Pakistan, CPEC, Special Economic Zones, Economic Development, Systematic ReviewAbstract
The main objective of this systematic literature review is to analyze the relation between Foreign Direct Investment (FDI) and Industrial Policy with Trade Policy within the time period of 2000-2025 in Pakistan. In this in-depth analysis of 25 peer-reviewed studies and policy documents, we explore the interactions between these three policy streams in determining the economic trajectory of Pakistan. The results show a complex and sometimes disjointed policy framework, with the overall policy focus on sector-specific incentives for attracting FDI and the processes of trade liberalization has largely eschewed industrial development. The China-Pakistan Economic Corridor (CPEC) launched in 2015 is a paradigm shift in the attraction of FDI through infrastructure investments, but issues of technology transfer, local content and sustainable industrial development remain. We highlight key trade-openness–industrial upgrading policy gaps and FDI promotion–domestic industrial capacity gaps. The review emphasizes the importance of integrated policy frameworks connecting FDI attraction and targeted industrial development and strategic trade policy. Overall, our analysis adds to the existing body of work on development economics by offering a detailed analysis of development economics interactions in a developing economy context.
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