11-01-2013, 04:22 PM
WHAT IS GLOBALIZATION
WHAT IS GLOBALIZATION.pptx (Size: 311.16 KB / Downloads: 28)
Definition of FDI
FDI occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country
Example: Nokia sets up a plant in India to manufacture cell phones
A category of international investment that reflects the objective of obtaining a lasting interest by a resident in one economy (the direct investor) in an entity resident in an economy other than that of the investor (the direct investment enterprise). --3rd edition of the OECD Benchmark Definition of Foreign Direct Investment
The numerical guideline of direct investment ownership is set at a threshold of 10 percent.
Fdi flows in india
The ratio of domestic savings to GDP has been generally lower than that of gross capital formation(GCF) to GDP.
During 2004-2005 this gap was 1.3 % of GDP which was filled by FDI
Since the liberalization of Indian economy inflows of FDI has greatly increased
The total FDI inflow(net) was mere US$ 0.13 billion in 1991-92 rose to US$ 2.15 in 1999-2000 and further to US$ 8.96 billion in 2005-06 and further to 37.18 billion in2009-10
In the year 2000 government allowed FDI up to 100% on the automatic route for most activities; with a small negative list where either the automatic route was not available or there were limits on FDI
Positive Impacts of FDI
Resource Transfer Effect
Superior scientific or managerial technology.
Employment Effects
MNEs, by investing in foreign countries, can create employment opportunities for the local workforce
Effect on competition
Steers up competition in the host economy.
Balance of Payment Effects
Balance of Payment: A country’s balance-of-payment is the difference between the payments to and receipts from other countries
FDI can have beneficial effects on a country’s balance of payment