Private Foreign Investment (PFI)

Abstract

In recent years there has been renewed interest in the role of private investment in stimulating growth and providing employment. There is a growing consensus that private sector led economies are more efficient than those dominated by state ownership and encumbered by various kinds of restrictions. Liberalization is being directed not only to the movement of goods, but also to services. It is recognized that certain measures affecting trade also influence investment, and because investment decisions could be influenced by non-market forces these measures are increasingly being brought within the purview of liberalization. Both in developed and developing countries, the government’s role is becoming increasingly more circumscribed, as efforts are being made to define a more limited role for the state and as economies are being reorganized to operate along the lines of market principles. In the present phase of the evolution of the world economy the pendulum has swung in favour of the private sector, as governments relinquish decision-making in a number of areas. Even in the developed countries the tendency is to encourage private initiatives in delivering ‘public goods’.