FDI IN DEVELOPING NATIONS

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  • Around 35% of the total produce gets spoiled….so FDI is good
  • TESCO invested in machinery & productoin
  • FDI IN DEVELOPING NATIONS

    1. 1. GROUP NO: 2 Merits & demerits of FDI on developing economies Anurag Bisen Hitesh Jain Abhishek Kar Rohit Mahind
    2. 2. Foreign Direct Investment An investment made by a company or entity based in one country, into a company or entity based in another country.
    3. 3. • • • • Greenfield investment Brownfield investment Mergers & acquisitions Joint ventures The Puzzles of Central and Eastern Europe Transformation and Integration Forms of FDIs ECES, Prague
    4. 4. Why FDI? • Industrial competitiveness • Transportation cost is high • Location specific advantages for resources • Market imperfection • Product life cycle for imported products • Trade barriers • Need to protect Technological know how
    5. 5. At the early stage FDI Positive • Structural changes accelerates Negative • No immediate growth generation • Foreign trade gap may widen • Restructuring fosters unemployment At the Mature stage Positive • Higher rate economic growth • More export and Improving trade balance Negative • Profit return increases • Lower tax collection as a result of tax
    6. 6. Merits of FDI on developing economies • No debt creation on the part of the government. • Assists Human capital formation. • Increases productivity and competitiveness. • Exports promotion • Domestic capital is inadequate • Foreign capital brings rare elements like technical know-how, business expertise & knowledge.
    7. 7. Merits of FDI on developing economies • Farmers get a better price • Influx of capital & rise in tax revenue • Increases employment • In case of India
    8. 8. Demerits of FDI on developing economies • • • • Sword on small retailers, shopkeepers. Monopoly creation Colonialism Adverse effect on capital A/C due to outflow of capital • FDI in retail: hits to unorganized retailers • Low income group may not afford the increased price • Inflation may rise
    9. 9. - TESCO in India with TRENT of Tata Jet – Etihad deal Tata – SIA deal

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