Enhancing Indian Fdi : Role, Prospects And Challenges Essay

Within this frame, the literature considered in this overview assumes that FDI is good as a matter of fact. As Jensen puts it, foreign investment “is an engine of employment, technological progress, productivity improvements, and ultimately economic growth. FDI provides both physical capital and employment possibilities that may not be available in the host market. More importantly, FDI is a mechanism of technology transfer between countries, particularly to the less-developed nations” (Jensen, 2003: 587; See also Li & Resnick, 2003). However, the empirical research seems to provide contradictory results (Greenaway & Kneller, 2007; Moran, Graham, & Blomström, 2005) or the outcomes are at least un-informative (Rodrik, 2012). Would be necessary also to take into account to what extent incentives and subsidies offered

The economy of Nepal is liberal, more privatized, and open as compared to other economies in South Asia. Nepalese economy is suffered from investment saving gap and trade gap which results into the need of FDI. Some of the limited natural resources available in Nepal are waiting for huge investment. But lack of sufficient domestic capital hampered the use of these resources. Therefore, FDI and its implication in Nepalese economy have great importance. Furthermore, cement industry is an industrial base of Nepal which occupies more than half of industrial gross domestic product. The following chapters deal with the background of the study of FDI opportunities in cement industry in Nepal.

Foreign direct investment (FDI) has played a huge part of the international economy influencing economic growth globally with a total of $1.2 trillion spending via it in 2014 (UNCTAD, 2015). Over the past five years from 2011 to 2016 the UK has seen its FDI increase by almost double to 2213 individual FDI projects, this being an increase of 11% from 2014/15 to 2015/16 (Department for International Trade, 2016). The UK also stands out as the clear leader in attracting this FDI into the UK taking a total of 20.9% of the market share of FDI in the European union (Ernst & Young LLP, 2016). FDI is becoming an influential power within the economic system for the UK. A current FDI project underway seeing the constructing of a new nuclear power

It was established and chattered in 1602 through the States-General of the Netherland's growing of a twenty-one year monopoly to start and proceed with its activities in the Asian countries. Initially, this MNE was supposed to have issued or was issuing stock. Moreover, The Dutch East India Company was the first mega corporation that was responsible with processing of quasi-government powers together with its capabilities to instill war, execute convicts, and imprison wrong doers. Moreover, it participated in negotiating treaties establishment of colonies and coining of money. The company is known to have been the first MNE globally. Moreover, the company was formerly known as Oost-Indische Compagnie, VOC (Hufbauer & Grieco, 2005).

Foreign Direct Investment (FDI) is defined as an investment made by individuals in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. The key feature of foreign direct investment is that it is an investment that establishes either a majority of control or an influence on the decision making of a business. Based on the graph below, Chile has a foreign direct investment growth of over 18% of GDP growth based on the years of 2010 and 2012. Since 2010, around 30% of the increase is based on the average investment of FDI. Based on Santander Banks, companies in Chile with overseas shareholders pay wages that are on average 130% higher than locally-owned companies of the same size in the same sector. The countries in 2013 with the highest foreign direct investments in Chile are the United States with 16.7 %, the Netherlands with 14.8%, Spain with 10.4%, Canada with 5.1%, the UK with 4.3 %, Japan with 3.8 % , Bermuda with 2.9 %, Brazil with 2.7 % , and Luxembourg with a low of 2.2%. Chile’s main investments are mining 44.9 %, services 17.6 %, electricity, gas and water 10.2 %, manufacturing 4.7 %, transportation and communications 3.4 %, trade 1.2%, construction 1.0 % and agriculture and fishing 0.2%.

Figure 1 shows the net inflow of FDI into the developing countries. There is a fall into the amount of FDI going to the developing countries from late 1980 to early 1990 and in the late 2000. Overall, there is an upward trend of amount of FDI going to the developing countries. The same trend with ODA shown in Figure 2. The amount of Net ODA received by developing countries from 1990 to mid-1990 is fluctuating then continued to fall until 2000. From year 2000 onwards, there is a steady increase of ODA received by the low-income countries. Compared with FDI and Net ODA, personal remittances has a steady upward trend (shown in Figure 3), noting a huge increase in 2008 of US$4.5 billion from US$15.2 billion in 2007. With the

There is no doubt that foreign direct investment (FDI) can do a lot of good for a country, for instance it can add to an economy’s productive capacity and import not just capital but technology, production skills and better management. Multinational Corporation (MNC) is a large corporation which produces or sells goods or services in various countries. MNCs often seek out developing countries in order to set up a branch of their corporation in that host country and they do this to seek out several benefits. One benefit is that the MNC can bring their product to a new market that may not have previously had it. Another reason to produce goods in a country that is not its home country is primarily because; in developing countries the MNC can

After opening of the trade barriers in 1991, the foreign investment inflows have increased enormously. Foreign capital, which actually plays an important role in increasing productivity of labor and accumulation of foreign reserve in developing countries to meet the current account deficit , is consist of foreign direct investment (FDI) and foreign portfolio investment(FPI). Both have worked as an instrument of global economic integration and stimulation. Apart of providing access to the foreign capital FDI also offers modern era technology, tools of creativity, desired skill sets and other complementary skills. In addition of producing additional economic activity and generating employment, foreign investment facilitates in flow of sophisticated technology.

The structure and operation of the global economy have undergone unprecedented changes in recent decades. Developing countries have increasingly accepted federal investment as an effective pathway to economic development and modernization, income growth, and employment. In fact, over 36% of all foreign inflows were to developing countries in 2005, (Büthe 741). This shift has been accompanied by varying regulatory demands from a growing body of stakeholders, with attempts to govern foreign direct investment (FDI) and finance that have experienced varying levels of effectiveness and support.

Foreign direct investment plays a critical role in financing the development of emerging economies. Foreign direct investment benefits countries through a transfer of resources in the form of capital, technology, management of resources, creation of work opportunities, and a positive impact on the country’s balance sheet, typically through an increase in export volumes. These benefits are essential for sustainable growth and development of a country, especially for developing countries. Despite the important role that foreign direct investment plays in helping to achieve the Sustainable Development Goals, many developing countries face challenges in accessing this source.

In today’s increasingly globally integrated business world, foreign direct investment (FDI) “provides a means for creating direct, established and long-lasting links between economies,” according to the 2008 Organization for Economic Co-Operation and Development Benchmark Definition of Foreign Direct Investment (OECD, 2008, p. 14). Foreign direct investment (FDI) is defined as “an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor,” by the United Nations Conference on Trade and Development (UNCTAD).9

Although many developing economies have access to abundant natural resources, they face more limited human capital, physical capital, and technology than developed nations. Developing countries are also constrained by corruption, the quality of their institutions, and political and economic instability. These constraints hinder capital accumulation and are a major obstacle to the efficient use of existing resources. It is not surprising that developing countries turn to international sources of economic development and economic growth, particularly foreign direct investment (FDI) Developing countries seek to attract international investors by offering new and relatively unexploited markets, access to natural resources and relatively cheap labor, locational advantages, and direct and indirect incentives

There is a general consensus that federal direct investments are thought to bring a considerate amount of economic well-being for developing countries. It is intriguing to observe the true effects of Federal direct investments on developing countries. While FDI has become an outcome of a more globalized world, some countries do not see the same benefits of this phenomenon as other countries. One country that has seen a heavy influx of foreign direct investment is India. This paper briefly addresses both the positive effects of FDI on India and looks at the growth of GDP in India’s economy. It concludes that FDI has transformed India’s economy and will continue to transform it. From this research, it will give a deeper

High inflow of foreign investment is needed for a country to gain a high sustainable economic growth. For an economy to grow by 7 to 8 percent a year, there is a need to invest about 30 to 40 percent of GDP. FDI is good and strong developmental equipment that contributes to the economic growth of host country. This growth are contributed by the high increase of capital stocks in the host country, increase in productivity and availability or creating of new jobs. These new creation provided by FDI also leads to productivity and knowledge spillover on the domestic firm. Productivity and knowledge spillover increases when the productivity of the local firm is gained through the leading edge of technologies employed by the foreign companies. However, there is some negative impact on this because the foreign firm or investor has the ability to draw the demand away from the local firm because of the price of reduction to their new different and innovative products or goods and due to this, the local firm’s productiveness will decrease because of the market run down by the foreign firm or investor. The ability of a local firm to take the spillover benefits is dependent on how the local firm takes in the foreign firm skills and technological know how.

A foreign direct investment has become a striking measure of economic development in both developed and developing countries. FDI and FII thus have become instruments of international economic integration and incentive. Fast growing economies like China, Singapore etc., have registered unbelievable growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic countries with cutting edge technology, desired skill sets, tools of innovation and other harmonious skills. The policies drafted to stimulate the flow of foreign capital in to India provided much needed an external (or) internal for India to emerge as an attractive destination for foreign investors. External factors such as global economic cues, FDI & FII, Exchange rate and Internal factors such as demand and supply, market cap, EPS generally drive and dictates the Indian stock market. The current paper makes an attempt to study the relationship and impact of FDI & FII on Indian stock market using statistical measures namely correlation coefficient and multi regression during the study period from 2005 to 2014. Sensex and Nifty were considered as the representative of stock market as they are the most popular Indian stock market indices. It concludes that Flow of FDIs and FIIs in India determines the trend of Indian stock market during the study