Foreign Direct Investment in India and China

Masters
Essay
Politics
Pages 14 (3514 words)
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Foreign direct investment (FDI) is the most talked about subject these days in the international economic parlance and for a long time, a rat race has been continuously going on among the world nations, especially the developing countries, to attract as much FDI as possible…

Introduction

Statistics reveal that in 2001 alone, China received around US $ 53 billion FDI while India's figures did not cross even US $ 4 billion indicating that it was below 10 % of what China had attracted ( Internet, Ong, China, FDI : China V.S. India / chart). If you go further, China had attracted a phenomenal amount of US $ 60 billions in 2004 while India had received a meagre sum of US $ 5.3 billions in that year (Internet, Venkitaramanan, 2005, Para 9).
Now it is clear that inflow of FDI into China had increased from $ 53 billion in 2001 to $ 60 billion having a growth of $ 7 billion in just 3 years while India had seen an increase of just $1.3 billion during the period. This difference has been continuously growing year after year making China the most sought after destination for the investing MNCs. And India has been really struggling to attract more and more FDI into its soil.
This difference is really vast considering that both countries have opened up their economies and moved ahead with economic reforms becoming the Asian giants. Both of them are high potential consumer markets too because of their huge populations. But, these two countries are still the developing economies and have been desperately looking for huge volumes of FDI for economic growth.
Because of the severe resource crunch at home, developing nations have been increasingly looking at alternate investm ...
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