Shenyang Aerospace University Does Foreign Direct Investment Influence Economic Growth In Rapidly Growing Economies? An Examination of China and India Master’s Program Presentation By Roni Bhowmik
Presentation Outlines Introduction Purpose of Study Objective of Study Research Methodology Findings and Conclusions
Introduction The recent studies conducted on FDI shows that the relevance of FDI inflows for the economic growth is very important and the policy makers adopted more liberalized approach to gain the benefit out of it. It is argued that FDI inflow has got so many effects on a growing economy. The role of FDI in creating employment, transferring technology, creating spillover effects and other activities that can act as a fuel for economic growth is quite worth noticing.
Cont. Studies done by Alfero (2003), Blomstrom et.al (1994) and Borenstein (1998) suggests that a country in order to attract FDI inflows should possess some relevant factors like better labor market, balance of payment, technology and infrastructure, stable policies etc. These factors act as a determinant to the flow of FDI in the host country. The dissertation explicitly covers the theory relating to the importance of FDI, the factors determining its growth and FDI impact on host country development.The countries of concern in the dissertation are India andChina. China opened its economy during 1979 byadopting open door policy.
Purpose of Study The purpose of the study is to create a model of both the countries and to analyze the pros and cons that exist in both economies and to find ways to overcome the problem of laggards through an effective empirical analysis. The study also intends to reveal a path for the less developed and other developing economy’s, which might emerge in the next few decades. There are only few research works that are from the Indian point of view. This study is also aimed to fill those gaps.
Objectives of Study1. To evaluate the contribution of FDI ineconomic growth (in INDIA and CHINA)2. To find the nature of contributionmade by these investment.3. To evaluate the rate of inflow of theseinvestment in INDIA and CHINA4. To study the significance of FDI withother economic growth indicators.
Research Methodology1. Methodology and Data collection:The data undertaken for the study coversa period of 39 years starting from 1970 to2009. The section for the purpose isdivided into two. The first section dealswith graphical representation. This methodis adopted to explain the relationshipbetween the growth rates of the primaryvariable of concern, FDI and GDP for Indiaand China as a whole. The second sectionpresents the regression analysis for theaggregate for India and China as a whole.
2. Graphical AnalysisGraph show about FDI and growth rate in China
Graph show about FDI and GDP growth rate in India
Findings and ConclusionsFDI inflows in India and China was periodical, and therelevance of the same is increasing year by year. Chinabeing isolated for more than 30 years opened its economyon the late 1970’s, since then the flow was astonishing.China at present is the main FDI attracting zone in entireAsia and India is in second place according to the recentstudies. India on the other hand opened its economy in1991 with the introduction of Liberalization, Privatizationand globalization policies, since then the inflow was quitegood. The pre- liberalization period of both the countrieswere of a closed nature, giving due importance todomestic firms. After realizing opportunities and possiblebenefits the policy makers in both the countries decided toopen the economy. The main aim of this research is toexamine the role of FDI in economic growth in CHINA andINDIA.