Private Foreign Capital in India :: essays research papers

"Private Foreign Capital in India"-Macro EconomicsProblem     Has Foreign Direct Investment (FDI) contributed to the proceeds of Gross Domestic Product (GDP) of India?     Null Hypothesis (Ho) There is no significant increase in growth of GDP due to FDI inflow in India.Alternative Hypothesis (H1) There is significant increase in growth of GDP due to FDI inflow in India.Project Prcis     Definition     FDI     The acquisition abroad of physical assets such as plant and equipment, with operating control residing in the parent corporation. GDP     The sum total of all final goods and go produced within a country in a specified period of time.      Foreign direct investment is an important source of capital, complements domestic private investment, and is ordinarily associated with new job opportunities, enhancement of technology and boo sts economic growth in host countries. Therefore foreign direct investment flows are increasingly looked as a panacea for all the development needs of developing countries. So, there is an increasingly intense competition among countries to attract FDI inflows so much so that governments look at the magnitudes of FDI received as indicators of their success.Preliminary Literature Survey     Recent literature has shown that some may bring valuable benefits to their host economies, others may crowd-out domestic enterprises and very reduce host country welfare. Studies have also shown that host government policies such as screening mechanisms, performance requirements, incentives and pro-active promotion play an important image in determining the quality of FDI inflows. Although FDI inflows into India have increased considerably since1991, its share would appear too small, especially if it is compared with that of other countries in the region such as China. Indi a has been receiving FDI inflows of about $3 to 4 billion a year that represent a marginal under 2 per cent of total inflows attracted by developing countries. In contrast, China has been receiving over $45 billion of inflows representing nearly a quarter of total developing country FDI inflows.      Particulars     China     IndiaFDI Confidence Index notice*(January 2000)     1.45     1.14FDI Inflow (US $ billions, 1998)     45.5     2.3FDI Stock (US $ billions, 1998)     261.1     13.2GDP (nominal US $ billions, 1999 estimate)     993     468.4* The FDI confidence index tracks the impact of likely political, economic and regulatory changes on the foreign direct investment intentions and preferences of the leadership of some of the worlds leading companies.Two par ameters i.e. Attractiveness and Current are considered for probable FDI inflow. From the diagram it is evident that India is total on Attractiveness and average on Current too. India scores well above countries like Indonesia, Thailand etc in terms of the parameters.