Advertisement

Multinationals and Foreign Direct Investment in India and China

  • Subrata Gupta
Part of the International Economic Association Series book series (IEA)

Abstract

This chapter seeks to focus on the role of foreign direct investment (FDI) in the economy since economic liberalization in 1991, and contends that the inflows of FDI so far in India have been disappointingly low. After considering a short historical perspective of India’s policy towards FDI, this chapter considers the structure and industrial breakdown of the inflows of FDI. An important element in the published discussion of the impact of FDI on the Indian economy is a comparison with China. China’s success in absorbing and utilizing FDI inflows in the post-reform period since 1978 has been contrasted with the corresponding failure of India: given its potential, India has attracted much less FDI than it should have attracted. While the Indian record can be explained in part as the outcome of certain mistaken policy prescriptions, it is amazing how a communist country such as China could free itself from its dogmatic barriers and attract FDI to such benefit.

Keywords

Foreign Investment Real Exchange Rate Multinational Enterprise Domestic Investment Foreign Direct Investment Inflow 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Bajpai, Nirupam and Jeffrey D. Sachs (2000) ‘India’s Decade of Development’, Economic and Political Weekly (Mumbai), 15 April.Google Scholar
  2. Blinder, Alan S. and J. E. Stiglitz (1983) ‘Money, Credit Constraints and Economic Activity’, American Economic Review, vol. 73, pp. 277–302.Google Scholar
  3. Brecher, R. A. and C. F. Diaz-Alejandro (1977) ‘Tariffs, Foreign Capital and Immiserizing Growth’, Journal of International Economics, vol. 7, pp. 317–22.CrossRefGoogle Scholar
  4. Cardoso, Eliana (1993) ‘Private Investment in Latin America’, Economic Development and Cultural Change, vol. 41, pp. 833–48.CrossRefGoogle Scholar
  5. Caves, Richard E. (1996) Multinational Enterprise and Economic Analysis (Cambridge: Cambridge University Press).Google Scholar
  6. Chadha, Rajesh (2000) ‘Exlm Policy Changes’, Economic and Political Weekly (Mumbai), vol. 35(16), (15 April) pp. 1343–6.Google Scholar
  7. Chandra, Nirmal Kumar (1999) ‘FDI and the Domestic Economy: Neoliberalism in China’, Economic and Political Weekly (Mumbai), 6 November.Google Scholar
  8. CMIE (1997) Report (New Delhi/Mumbai: Centre for Monitoring the Indian Economy).Google Scholar
  9. Dunning, J. H. (1993) Multinational Enterprises and the Global Economy (Boston, Mass: Addison-Wesley).Google Scholar
  10. Economic Survey (2003) (New Delhi: Government of India).Google Scholar
  11. Fry, Maxwell J. (1995) Money, Interest and Banking in Economic Development (Baltimore, Md.: Johns Hopkins University Press).Google Scholar
  12. Graham, E. M. (2004) ‘Do Export Processing Zones Attract FDI and Its Benefits — The Experience from China’, Journal of International Economics and Economic Policy, vol. 1(1), pp. 87–103.CrossRefGoogle Scholar
  13. Graham, E. M. and E. Wada (2001) ‘Foreign Direct Investment in China: Effects on Growth and Economic Performance’, Institute for International Economics Working Paper no. 01–3, Washington, DC.Google Scholar
  14. Kumar, Nagesh (1990) Multinational Enterprises in India (London/New York: Routledge).CrossRefGoogle Scholar
  15. Kumar, N. and N. S. Siddhartan (1997) Technology, Market Structure and Internationalisation (London/New York: Routledge).Google Scholar
  16. Nagaraj, R. (2003) ‘Foreign Direct Investment in India’, Economic and Political Weekly (Mumbai), 26 April.Google Scholar
  17. Nayar, Baldev Raj (2001) ‘Opening Up and Openness of the Indian Economy’, Economic and Political Weekly (Mumbai), 15 September.Google Scholar
  18. Rangarajan, C. (2000) ‘Capital Flows: Another Look’, Economic and Political Weekly (Mumbai), 9 December.Google Scholar
  19. Serven, Luis and Andres Solimano (1992) ‘Private Investment and Macroeconomic Adjustment — A Survey’, World Bank Research Observer, no. 7.Google Scholar
  20. Srivastava, Sadhana (2003) ‘What Is the True Level of FDI Flows to India?’, Economic and Political Weekly (Mumbai), 28 June.Google Scholar
  21. Sun, H. (1998) ‘The Macroeconomic Impact of Direct Foreign Investment in China, 1979–96’, World Economy, vol. 21, 5 July.Google Scholar
  22. Van Wijnbergen, S. (1982) ‘Stagflationary Effects of Monetary Stabilization Policies: A Quantitative Analysis of South Korea’, Journal of Development Economics, vol. 37, pp. 133–69.CrossRefGoogle Scholar
  23. UNCTAD (2001) World Investment Report 2001 (Geneva: United Nations).Google Scholar

Copyright information

© International Economic Association 2005

Authors and Affiliations

  • Subrata Gupta
    • 1
  1. 1.Jogamaya Devi CollegeCalcutta UniversityIndia

Personalised recommendations