The Impact Of Fdi On The Economy Of The Country And Current Trend Of Fdi

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Chapter: 2 Literature Review 2.1 Introduction The research aims to find out the impact of FDI on economy of the country and current trend of FDI in retailing sector of India with specific reference to E-Commerce. This section presents the discussion of various authors and researchers on the topic of research. The section start with defining concept of FDI and presenting its impact on economy. As the case of retail sector of India is considered to understand the impact of FDI , recent trend of FDI in India and its impact on economy is discussed. Further the retail sector with specific reference to E-commerce sector is discussed in light of FDI and the trends, advantages and disadvantages associated with the FDI in E-commerce sector is…show more content…
Resources that are invested by foreign companies help in boosting the economic development that also includes increase in employment rate. Output of the country increases as FDI bring along with them new technology, efficient management that make use of resources efficiently, and make use of unemployed population of recipient country. Many researchers have focused the positive aspects associated with FDI (Xu and Wang, 2007). Country like India which is in developing phase FDI is an important factor to grow rapidly with the use of transferred technology, managerial skills and best practice techniques from foreign developed countries (Hill,2000). A lot of advantages like, gain in capital, training , skill aquisition, knowledge of new technology, and different management practices are associated with the FDI in recipient country . Jenkins and Thomas (2002) argue that FDI can contribute to economic growth not only by providing foreign capital but also by crowding in additional domestic investment; so it increases the total growth effect of FDI. Barrel and Pain (1997) conducted the analysis of impact of FDI and found that in UK alone due to FDI there is growth in 30% productivity of labour between year 1985 -1995. Productivity of the domestic companies also increases by FDI. As FDI provides opportunity for local businesses to interact with foreign companies thus assists in understanding the management skills which results in replication of
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