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What is FDI Flows

Chapter 13
Handbook of Research on Economic, Financial, and Industrial Impacts on Infrastructure Development
Real investment in factories, capital goods, land and inventories where both capital and management are involved and the investor retains control over the use of the invested capital. Among the various forms of private foreign investment, foreign direct investment (FDI) flows are usually preferred over other forms of external finance because they are non-debt creating, non-volatile and their returns depends on the performance of projects financed by the investors. FDI can complement local development efforts in a number of ways, including boosting export competitiveness; generating employment and strengthening the skills base; enhancing technological capabilities (transfer, diffusion and generation of technology); and increasing financial resources for development.
Published in Chapter:
Trade Liberalization, Infrastructure Development, and FDI in India and China
Rajib Bhattacharyya (Hooghly Mohsin College, India)
Copyright: © 2017 |Pages: 27
DOI: 10.4018/978-1-5225-2361-1.ch013
Abstract
The two largest economies in Emerging Asia, China and India, are considered to be the ‘power houses' of global economy. China and India adopted the policy of ‘opening up to the outside world' respectively in 1978 and 1991. Trade openness and infrastructure development has been acknowledged as crucial pre-conditions for attracting foreign direct investment (FDI). China's path of development was guided by the so called fast growing nations, which laid substantial emphasis on building strong infrastructural base at great speed. But India, on the other hand did not adopt the strategy of building infrastructure base prior to the growth of demand, like the one which has been followed by most successful Asian countries achieving rapid infrastructure development. So early opening up and improved infrastructure has attracted more FDI in China than in India. So the present study seeks to examine the relationship between trade liberalization, infrastructure development and FDI inflows in India and China using secondary time series data in a comparative analytical framework.
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