The Role of Financial Transparency in Attracting FDI to Pakistan: An Investor's Perspective

Abstract

This study examines the key factors influencing Foreign Direct Investment (FDI) in Pakistan, focusing on economic growth, job creation, political stability, financial transparency, and regulatory challenges. Data were collected from 130 company managers in Pakistan through a survey, analyzing their perceptions of the role of FDI in shaping investment decisions. The findings reveal that economic growth (Mean: 4.32) and job creation (Mean: 4.12) are viewed as the most significant benefits of FDI, while political stability (Mean: 4.20) and financial transparency (Mean: 4.61) play crucial roles in building investor confidence. However, corruption (Mean: 4.23) and regulatory gaps (Mean: 4.58) are major hindrances to achieving greater financial transparency and attracting more FDI. The study compares these findings with international research, underscoring the universal importance of transparent financial reporting, stable political environments, and investor-friendly policies. The study concludes that addressing corruption issues, improving regulatory frameworks, and enhancing financial transparency are essential for Pakistan to maximize its FDI potential and support long-term economic growth.