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.
[...] Of these two modes, the latter—accomplished largely by foreign direct investment (FDI)—has expanded significantly faster than the former. Furthermore, FDI and its benefits are concentrated among industrialized countries and those developing nations that embrace democracy and free markets. FDI, or more precisely, the activity that FDI spawns, is now the dominant mode by which economies are becoming integrated. In fact, it is estimated that multinational firms account for at least one third of world trade, and most of this trade is conducted between affiliates of these firms. [...]
[...] Foreign Direct Investment and Trade One of the catch phrases of the times is the "global economy." Although no one has yet defined exactly what is meant by the global economy—let alone determine what are the full implications of the globalization of economic activity—there is consensus that what is happening is that markets that once were largely contained within national boundaries are now being integrated by means of both international trade and the international expansion of the activities of multinational corporations. [...]
[...] THE DATA: Foreign Direct Investment (FDI) - Unmentioned Pitfalls Since the launch of "Manmohanomics" by the Narasimha Rao government in 1991 - FDI has been touted as the magic wand that will transform "under- developed" India into an advanced nation with a "modern" infrastructure. Every government that has followed has dutifully talked of taking steps to encourage and expand FDI. Mr. Vajpayee in his inaugural address also spoke about the priority the NDA government would give to promoting FDI. In his speech, Mr. [...]
[...] Foreign Investment Flows to India (In US$ million) INVESTMENT (SIA/FIPB) NRI shares * unincorporated bodies earnings capital # INVESTMENT funds & others Provisional Relates to acquisition of shares of Indian companies by non-residents under Section 6 of FEMA 1999. Data pertain to inter-company debt transactions of FDI entities Data represent net inflow of funds by FIIs. FDI: Country-wise Inflows* (In US$ million) Country-wise * : Data in this table exclude FDI inflows by way of acquisition of shares by non-residents under section 6 of FEMA Provisional FDI: Industry-wise inflows* (In US$ million) Products Restaurants Insurance, Real Estate & Business Services Services Scientific Services Services * : Data in this table exclude FDI inflows by way of acquisition of shares by non-residents under section 6 of FEMA Provisional Foreign Portfolio Investment Flows (In US$ million) Note: 1. [...]
[...] FDI In India:- India: "Best destination for FDI" INDIA is the 'best destination' for foreign direct investment (FDI) and joint ventures, claims country's Commerce and Industry minister Kamal Nath. Addressing an audience of US investors at the Focus India Show in Chicago recently he said that India had emerged as an across the board low cost base, attractive enough to multinationals to relocate in the country. More than one hundred of the Fortune 500 companies have a presence in India, as compared to only 33 in China, he pointed out. [...]
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