Foreign direct investment: India

Type :

Term papers

Pages :

29 pages

Format :

.doc

Published date :

03/18/2009

Category :

Economics & finance

Sub category :

Economics

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Summary :

Abstract
Introduction
What is FDI?
Types Of FDI
Impact of FDI
Myths about the benefit of FDI
Impact of FDI in Asia
FDI in India
Investment in Indian market
Potential of Indian market
Foreign controlled firm in India
Major Initiatives to attracts FDI
FDI in Indian automobile industry
Does FDI contribute to economic growth or doesn't?
FDI and trade
FDI boosts trade
FDI and democracy
Who attracts FDI?
FDI sparks competition
Implication for policy makers
FDI unmentioned pitfalls
Conclusion
Bibliography

Abstract

Developing countries, emerging economies and countries in transition increasingly see foreign direct investment (FDI) as a source of economic development, modernization and employment generation, and have liberalized their FDI regimes to attract investment. The overall benefits of FDI for developing economies are well documented. Given the appropriate host-country policies and a basic level of development, a preponderance of studies show that FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment and enhances enterprise development. All these contribute to higher economic growth. Beyond the initial macro-economic stimulus for actual investment, FDI influences growth by increasing total factor productivity and, more generally, the efficiency of resource use in the recipient economy. Technology transfers through FDI generate positive externalities in the host country. The benefits from FDI do not accrue automatically and evenly across countries and sectors. In order to reap the maximum benefits from FDI, there is a need to establish a transparent, broad and effective enabling policy environment for investment and to put in place appropriate framework for their implementation. Such an environment must provide incentives for innovations and improvement of skills and contribute towards improved competitiveness. Government has put in place a liberal, transparent and investor friendly FDI policy, wherein FDI up to 100 per cent is allowed under automatic route for most of the sectors/ activities, where the investor does not require any prior approval.