...Table of Contents INTRODUCTION 2 LITERATURE REVIEW 3 FOREIGN DIRECT INVESTMENT 5 MAJOR IMPACTS OF FDI 8 EXPORTS 8 TREND IN EXPORT IN INDIA 9 MAJOR FACTORS THAT AFFECT EXPORTS 10 EXPORT TRENDS AND THE WAY AHEAD 12 IMPACT OF FDI ON EXPORT 12 HOW FDI DRIVES EXPORT 12 IMPACT ON SERVICE INDUSTRY 13 METHEDOLOGY 14 PERIOD OF STUDY 14 SOURCES OF DATA 14 HYPOTHESIS 14 RESULT 15 ANALYSIS 16 IMPLICATION 16 CONCLUSION 16 REFERENCES 18 EXHIBITS 20 FIGURES 23 INTRODUCTION Foreign direct investment is an important part of the economy of every country.It helps expedite the globalisation process. Firms across the world interact with other firms situated in different countries. This results in mutual growth of firms and states. Over the years FDI as a percentage of GDP of world has increased significantly. In 1980 the total stock of FDI equalled only 6.6 per cent of world gross domestic product, while in 2003 the share had increased to close to 23 per cent. This implies that the world economy is getting increasingly interconnected resulting into the flow of goods and capital into developing nations. India has seen tremendous growth in the FDI inflow over the past two decades. By 1997 India became the ninth largest recipient of such investment among the developing economies. Flow of capital and goods has impacted various macroeconomic variables of the economy. Export is one of the variables that gets affected due to the increase in FDI.It has seen...
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...foreign exchange are accompanied by flow of entrepreneurial and managerial skills and technology. FDIs complement the domestic savings in financing the capital formation in the host country. FDIs contribute to the generation of output and employment. The foreign exchange inflow augments the supply of foreign exchange, which is often scarce in the developing countries. In most cases, however, the project being set up with FDI is dependent upon imported plant and machinery, and technology. The foreign exchange -inflow takes care of these import requirements, partially or fully. The direct cost of FDI to the host country comprises remittances made on account of dividends on the equity held abroad, interest on loans or suppliers' credits extended by the foreign investors, royalties and technical fees, for transfer of technology and other services provided by the foreign partner. Unlike foreign borrowings, servicing remittances, viz., dividends in the case of FDI begin after the project starts making profits. However, the servicing burden of FDI builds up very fast, and consumes considerable foreign exchange resources of the host country. Further, these remittances have the tendency to grow over time as the enterprise consolidates and prospers. Thus, the direct impact of FDIs on the host country includes both positive and negative aspects. The favourable impact is by way of generation of output and employment by complementing the domestic savings and bringing...
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...I) NEGATIVE IMPACT 1. Exploit the workforce that is available in host country. Take undue advantage of low cost labors , unskilled labors…, make use of probation to consistently change labors without training or equipping them with experience, skill and qualification Because FDI enterprises in Vietnam are mainly conducted labor-intensive processes such as machining and assembly. Even the leading technology companies such as Intel Inside Sam Sung that have production facilities in Vietnam mainly produced components, as inputs to the process of creating a product in another country. Besides, a number of investment projects of China, one of the major partners of Vietnam, often use Chinese labor instead of hiring workers from VN 2. There is little technology transfer and management skill transfer into Viet Nam. Even Viet Nam becomes an industrial garbage after adopting out of date technologies. Investors tend to keep their “know- how” in secret. Channel 1: At a conference to summarize 25 years of new FDI was organized, Deputy Minister of Planning and Investment said Dao Quang Thu, 80% FDI technology used currently in Viet Nam is average, 5 6 % used is high-tech, 14% low and backward, there are individual cases using outdated technology. Technology transfer is mainly done horizontally - between business enterprises, with little change in the level and technological capacity. Despite the fact that there would be no corporations, they now carry the No. 1 technology, latest...
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...Introduction Foreign Direct Investments (FDIs) have been found to be important aspects of economic development of host countries, and crucial, in building technological capabilities of local companies in developing countries. It is a channel for international diffusion of technology, having the potential to transfer technological, organizational and managerial practices to developing countries, which may, in the long run, lead to higher technological capabilities, and innovation, resulting in economic growth in these countries. For Tanzania specifically, FDI is a type of investment which is relatively infant as the government had opted for a socialist path of economic development from 1967 to around mid 1980s, following the Arusha Declaration. In mid 1980s, the government initiated and implemented deliberate economic liberalization policies. These resulted into the rise of FDI in Tanzania. For instance, FDI inflows increased from USD 2,418.7 million in 1999 to USD 3,776.6 million in 2001. Such investments were concentrated in the sectors of manufacturing (33.4%), mining and quarrying (28%) as well as agricultural (6.7%) (TIC, BoT and NBS, 2004: 23-24)4. 2.2 Foreign Direct Investment (FDI): Definition and Characteristics 2.2.1 Defining FDI Several FDI definitions have been given in the literature and these are more or less similar. A more representative definition of FDI is that by Rutherford (1992: 178; 1995: 178-179) who defines FDI as business investment in another country...
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...“Impact of FDI and Joint Venture on Employment Generation: A Multi-sector Experience of Bangladesh Economy” 1. Md. Nazmul Hasan, Lecturer of Finance and Banking, Daffodil International University, 4/2, Sobhanbag, Prince Plaza, Mirpur Road, Dhanmondi, Dhaka-1207, Bangladesh. (Correspondent Authors). palashdu007@gmail.com. Cell: +88-01915.653068 2. Hussain Ahmed Enamul Huda, Lecturer, Department of Finance, University of Dhaka, Dhaka – 1000, Bangladesh. Haehuda@yahoo.com. Cell: +88-01911.745255. Abstract: Foreign Direct Investment (FDI) is very crucial for the sustainable development of developing countries in general and in specific for LDCs-like Bangladesh. For Bangladesh, inflow of foreign direct investment is the major stimulus for the sturdy and long-standing economic growth which is subject to the improvement of many socio-economic and political factors. As a promising hub for foreign direct investment, Bangladesh has already conquered popularity for its simplistic, liberal and most investments friendly climate throughout the globe. Being an open, flexible and promising destination for foreign direct investment, Bangladesh has been drawing attention of the global investors into a focal investment destination within SouthAsian region. Its investment climate is mostly featured by munificent and alluring packages of incentives to investors. In addition, there is no discrimination between the local and foreign investors in facilitating the incentives they owe from the investment...
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...particularly with respect to Foreign Direct Investment (FDI) whose role in economic development is acknowledged by policy makers. India cautiously opened up to FDI with the hope that it could act as a catalyst for growth as it is believed to fill up the critical gaps of capital and technology and also be a facilitator for transfer of managerial and technical skills, for employment generation and export promotion. Keeping with the policy of progressive liberalization the Government of India has now initiated a debate of allowing FDI in multi- brand retail. 100% FDI in wholesale cash-and-carry trade was opened in April 2006 followed by further liberalizing by allowing 51% FDI in single-brand retail in 2008. The impact of this has been an FDI flow of Rs. 7799 crore into the retail sector. The issue of FDI in multi- brand retail had been put on the backburner for so long as it had a direct impact on the strong 1.3 crore small retailers in the unorganized sector. The giant multinational retail players are pushing for the opening up of India's retail trade as the growing middle class with rising disposable incomes means huge market potential. Even domestic retailers such as Future Group, Reliance, Birla, etc are lobbying hard for FDI. By initiating the current debate the Government has made its intention of removing multi-brand retail from the 'restricted list' very clear and the need is to safeguard all the stakeholders' interests. FDI in Multi-Brand Retail – A Step in the right Direction ...
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...1.0 Introduction FDI refers to is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in the country. Foreign Direct Investment which is a passive investment which is passive investment in the securities of another country as stock and bonds. Foreign direct investment occurs when a firm invests directly in facilities to produce and /or market a product in a foreign country.FDI plays a dominant role in the economics of Bangladesh through accelerating Gross Domestic Product(GDP),export and domestic investment followed by overall economic growth. The objective of this term paper is to find out the major effect of FDI on industrial productivity of Bangladesh. Foreign direct investment (FDI) enables a capital poor country like Bangladesh to build up capital, avoid threat to unemployment develop productive capacity. Conventional wisdoms have it that firms with foreign equity tend to be more productive. This could be due to the firm specific tangible assets such as exclusive technology and product designs, or the intangible know-how embodied in foreign equity such as marketing, networking and sourcing. Such assets may be more readily available in big multinational corporations (MNC). As such, being part of MNCs allow the local subsidiaries with foreign equity to gain access to these assets...
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...FDI in Retail India: Impact on Farmers, Consumers and Industry Nilesh Kate, Research Scholar Sinhgad Institute of Management and Computer Application, Pune nileshkate503@gmail.com 9096714133 ****************************************************************************** Abstract: The retail sector in India is expanding and modernizing rapidly in line with India's economic growth. It acts as a major catalyst in the development of a country through up-gradation of technology, managerial skills and capabilities in various sectors. Rise in purchasing power, growing consumerism and brand proliferation has led to retail modernization in India. The growing Indian market has attracted a number of foreign retailers and domestic corporate to invest in this sector. FDI in the retail can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers and suppliers (farmers). The overall retail market (organized and unorganized) is expected to grow at a compounded rate of 15% over the next 5 years from INR 23 trillion in 2011-12 to INR 47 trillion in 2016-17. Rising incomes will be the primary driver of this growth. Favorable demographics, increasing urbanization and nuclearisation of families are other factors which will drive retail consumption in India. Organized retail, which constituted a low 7% of total retail in 2011-12, is estimated to grow at a CAGR of 24% and attain a 10.2% share of total retail by...
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...iiste.org An Evaluation and Forecast of the Impact of Foreign Direct Investment in Nigeria’s Agriculture Sector in A VAR Environment Ayodeji Adetunji Idowu* Liu Ying Huazhong Agricultural University, No.1, Shizishan Street, Hongshan District, Wuhan, Hubei Province · 430070 · P.R. China * E-mail of the corresponding author: ayodeji.idowu@hotmail.com The research is financed by project (NCET-12-0868) New Century Excellent Talents and Project (2013PY017). Abstract This study evaluated and forecasted the impact of FDI in the agricultural sector from 1980-2007, specifically its impact on agricultural output and labor in a Vector Auto Regression (VAR) environment. Data used in this study were sourced from Central Bank of Nigeria (CBN) statistical bulletin (2009). Results from the analysis revealed that FDI in the period under review had no significant impact on agricultural output. In addition, results of the forecast estimates showed that the current volume of FDI would not significantly affect agricultural output but will have significant positive impact on labor (employment generation). This study recommended for increase in the volume of FDI and advised government and other stakeholders to seek FDI that will improve existing or introduce new technology in the agricultural sector and enhance domestic capacity or domestic investment, even if the opportunity cost of a reduction in labor may have to be paid. Keywords: Agriculture; FDI; Nigeria; SAP; VAR. 1. Introduction Nigeria, a...
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...Analyzing the impact of FDI on Inflation of the NAFTA Countries using Fixed Effects Model and Random Effect Model Objective of this study is to examine the impact of foreign direct investment on the inflation of the NAFTA countries (United States, Canada and Mexico). To conduct the analysis we have developed a panel data set consisting of FDI and inflation data of all three countries from 1988 to 2014. One important aspect of this analysis is test the notion that unobservable factors that might simultaneously affect the left hand side and right hand side of the regression are time-invariant. To test this, we need to use Fixed Effects (F-E) model and Random Effects (R-E) model. We used STATA for necessary analysis. Results are presented below: Simple OLS regression (see Table-1) tells us that for NAFTA countries, FDI and inflation is negatively correlated and statistically significant. The estimated coefficient of -.0000251 indicates that for 1 dollar increase in FDI, inflation is expected to decrease by .0000251%, ceteris paribus. The data set has been estimated by both 1) least squares dummy variable (LSDV) estimator. 2) Fixed effects estimator. The LSDV (see Table-2) fits the data better than does the pooled OLS. The F statistic increased from 5.05 to 10.21 (p<0000); SSE (sum of squares due to error or residual) decreased from .633356331 to .482044733; and R2 increased from 0.0601 to 0.2846. Due to the dummies included, this model loses two degrees of freedom (from 79...
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...Facts About and Impacts of FDI on China and the World Economy Yuqing Xing China: An International Journal, Volume 8, Number 2, September 2010, pp. 309-327 (Article) Published by NUS Press Pte Ltd DOI: 10.1353/chn.2010.0002 For additional information about this article http://muse.jhu.edu/journals/chn/summary/v008/8.2.xing.html Access Provided by Hamline University at 06/25/12 7:34PM GMT Facts About and Impacts of FDI on China and the World Economy Yuqing XING This paper provides a comprehensive review of foreign direct investment in China over the last three decades. It reviews the growth, sources and distribution of FDI in China and analyses factors determining FDI inflows. It summarises the contributions of FDI to the Chinese economy in terms of economic growth, total factor productivity, exports and technology progress. Finally, the paper discusses potential impacts of FDI in China on the rest of the world in terms of FDI-competing countries and FDI source countries. (FDI) among all developing countries, China received a cumulative total of USD854 billion in FDI from 1979 to 2008 and benefitted tremendously from both tangible and intangible assets associated with FDI inflows. In fact, in the modern history of economic development, no other country has ever benefitted, and continues to benefit, from FDI as much as China. There is a consensus among academic scholars specialising in the Chinese economy that, over the last three decades, FDI has been a critical...
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...THE EMPIRICAL ANALYSIS OF IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NIGERIA BY OKUNLOLA TUNDE S. MATRIC NO: 139191 September 2011 Being research work submitted to Department of Economics, Faculty of Social Sciences, University of Ibadan, in partial fulfillment of the requirement for the award of Bachelor of Science (B.Sc) in Economics CERCTIFICATION I hereby certify that this work was carried out by OKUNLOLA TUNDE S. of Matric No 139191 in the Department of Economics, Faculty of Social Sciences, University of Ibadan. …………………………………. ……………………………… Date Dr. B. Fowowe Supervisor DEDICATION My sole dedication goes to God almighty whose mercy has never ceased in changing me despite all odds, whose boundless love and vast grace is bringing to pass my childhood dreams and fantasies. ACKNOWLEDGMENT My deepest gratitude goes to my parents who always, tirelessly and sacrificially support me, trust me, care for me and love me despite all my short comings and even when it so difficult. May the lord reward you abundantly. And also to my supervisor, Dr. B. Fowowe, I say thank...
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...INTRODUCTION Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of innovation. As a result inflow of Foreign Direct investments 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 stimulation. Fast growing economies like Singapore, China, Korea etc have registered incredible 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 counties with cutting edge technology, desired skill sets, tools of innovation and other complementary skills. Apart from helping in creating additional economic activity and generating employment, foreign investment also facilitates flow of sophisticated technology into the country and helps the industry to march into advanced technology. A favorable business environment fostered Indian economy after 1991, when the government of India opened the door for foreign capital in the way of direct investment and through foreign institutional investors. The policies drafted to stimulate the flow of foreign capital in to India provided much needed impetus for India to emerge as an attractive destination for foreign investors. Consequently, the international capital inflows have been...
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...Foreign Direct Investment: Impact on Sectoral Growth in Bangladesh Introduction Foreign direct investment (FDI) is a potent weapon of developing the Bangladesh economy and can play an important role in achieving the country’s socio-economic objectives including poverty reduction goals. In a capital-poor country like Bangladesh, FDI can emerge as a significant vehicle to build up physical capital, create employment opportunities, develop productive capacity, enhance skills of local labor through transfer of technology and managerial know-how, and help integrate the domestic economy with the global economy. This policy note provides an assessment of the current situation of FDI in Bangladesh and examines its impact on the country’s balance of payments. Foreign Direct Investment (FDI) is capital provided by a foreign direct investor, either directly or through other related enterprises, where the foreign investor is directly involved in the management of the enterprise. Until the1980s, most developing countries viewed FDI with great weariness. In recent years, however FDI restrictions have been significantly reduced. Most countries offer incentives to attract FDI, such as tax concessions, tax holidays, accelerated depreciation on plants and machinery, export subsidies and import entitlements etc. As a developing country, Bangladesh needs FDI for its ongoing development process. Since independence, Bangladesh is trying to be a suitable location for FDI. Special zones have been...
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...analysis is an important step. It is generally theorized that accumulation of human capital is a key driver of economic growth. According to economists, dissemination of knowledge to general population allows increasing returns and generates positive externalities. Therefore, it is a central concept of development economics that investment in human capital should be the foremost priority of developing countries. Foreign direct investment refers to international movement of capital across national boundaries. This may take the shape of creation of a subsidiary abroad or to exercise control on the management of a company in another country. The effects of FDI are generally considered to be highly positive on the growth of host country since it leads to transfer of technology and generation of employment in host countries. FDI has experienced strong growth since the mid-1980s and also contribute significantly to economic globalization. Foreign direct investment is also presumed to have positive outcomes for workers in the form of higher wages (Eicher &...
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