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viduals not find enough opportunities to stay in Pakistan. The study of Buffie (1993) investigated the impact of the FDI on the domestic capital allocation and underemployment. Study also focused on the uncertainty of the domestic welfare of FDI in manufacturing sectors. Study also attempted to find out the short run effect and long run effect of FDI as underemployment. In research methodology, regression analysis included as technique for modeling and analyzing several variables. Conclusion showed that Manufacturing sector is highly uncertain. While underemployment is likely to diminish in the short run over the long run the outcome is adverse. FDI in manufacturing sector improve the welfare. Underemployment declines and the domestically-owned capital stock expand steady.

Developed countries in recent time increased the outward FDI to gain more returns. To develop the employment developing countries like Pakistan often use inward FDI as a source of growth and employment. Whereas on the other hand developed countries are more grown rapidly in term of outward FDI and the returns. The study of Lane and Milesi-Ferretti (2003) found that current decades, advance countries have grown rapidly foreign assets and liabilities. In the international debt market, the portfolio equity and foreign direct investment (FDI) category have grown in importance relatively. This Study has taken the sample of industrial countries and countries international financial integration. The objective of the study is to seek and explain the cross-country and time-series variation in the size of international balance sheets. Study also examined the behavior of the rates of return on foreign assets and liabilities, relating to 'market' returns. The study also indentified countries holding large portfolio equity and foreign direct investment (FDI) portfolios that take most of returns in the form of capital gains. In this research several ratios methods used to analyzed. Results showed that developed countries have a considerable raise in the FDI and the returns. International cross-holdings of foreign assets and liabilities have a considerably increased.

Economic development in Pakistan is the associated with various elements, including investment and employment consider the major elements. Employment in Pakistan is very much dependent on the foreign affiliation investment. Most of developing countries including Pakistan are not motivated toward self employment and entrepreneurship concepts. The study of Alfaro and Andrew (2007) examine the FDI and Growth at the Industry Level, FDI and industry characteristics, FDI and financial dependence, FDI and Human Capital formation, and FDI and Country Targets. In research methodology, regression analysis included as technique for modeling and analyzing several variables. Study mentioned that the effect of FDI on economic growth is important for a number of reasons. In the process of economic development FDI has the implications for the effect of rapidly growing investment flows. If FDI does not exert a robust positive influence on growth, these pecuniary incentives and the active international competition for investment should be reconsidered. Study resulted that the higher effects for industries dependent on external finance and those reliant on highly skilled labor. FDI has not an effect on total factor productivity. Elaborating the consequence of FDI on economic development is essential for a num