it bop presentation

8/4/2019 It Bop presentation

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COMPARATIVE STUDY OF FDI IN INDIA, CHINA

AND BRAZIL

Prakhar Gupta

Rishav Raj

Jay KhattarAnkit Asati


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A QUICK REVIEW

At a glance:

In recent years China ,India and Brazil haveattracted huge amount of FDI from acrossthe globe

Thus, liberalisation and increasing integrationof India with the global economy havehelped step up FDI .


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Still it lags much behind as compared toBrazil and China.

Over the past decade FDI flows into Indiahave averaged around 0.5% of GDPagainst 5% for China and 5.5% for Brazil


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REASONS

India has lagged behind due to its focus onservices & small manufacturing industry modelin contrast to Chinas mega Manufacturing

model as manufacturing remains thecenterpiece of Chinas foreign investment

sector.

Similarly ,a variety of factors (high levels ofcorruption, acute income inequality and a longhistory of political-economic instability) hashindered Brazil from realizing its FDI potential.


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A MODEL

The Log-Log Regression Model

We plot for log of FDI vs log of GDP.

We also plot for log of FDI vs log of Export


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INDIA (FDI VS GDP)


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INDIA (FDI VS EXPORTS)


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CHINA (FDI VS GDP)


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CHINA (FDI VS EXPORTS)


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Challenges/Problematics:

Although FDI inflow to India has beenincreasing, regional distribution of the same is

found to be more inequitable Chinese firms have been crowded out by the

strong FDI inflow

Brazilian economy faces he complexity of theinteraction between the micro and macroeconomic dimensions of the internationalizationof the economy


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Future Prospects:

In the year 2010, India has assumed anotable position on the world canvas as akey international trading partner by the of theimplementation of its consolidated FDI policy.

Now, the foreign investors can inject their

funds though the automatic route in theIndian economy.


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With China becoming the member of WTO in2001, more and more of FDI has started toflow as a result of opening up of domestic

market and better trade regulations.

With the simplification of registrationprocedure for FDI inflows in the 90s it has led

to a decline in the administrative costsassociated with the entry of FDI inflows intoBrazil.


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Policy Suggestions:

India must adopt a proactive FDI policyregime

To ensure a more equitable regionaldistribution of such flows both central andstate government should take concerted

strategy for improvement in infrastructurefacilities and creation of sound economic andpolitical environment


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Anti corruption rules and regulatoryframework need to be implemented strictly inBrazil

Also, India and Brazil clearly need to adoptpolicies that grow saving and investment soas to increase the productivity of its working

population. Else there is a threat to be leftbehind the highly productive and skilledChinese labor


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THANK YOU

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