288 33 Powerpoint Slides Chapter 12 Foreign Direct Investment
Post on 02-Dec-2015
208 Views
Preview:
Transcript
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
International BusinessInternational Business
Rakesh Mohan Joshi Rakesh Mohan Joshi
Professor & Chairperson, IIFT New DelhiProfessor & Chairperson, IIFT New Delhi
1
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Foreign Direct Foreign Direct
InvestmentInvestment
Chapter 12
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Learning ObjectivesLearning Objectives To explain the concept of foreign direct To explain the concept of foreign direct
investment (FDI)investment (FDI) To discuss various types of FDITo discuss various types of FDI To develop a conceptual understanding To develop a conceptual understanding
of the theories of international of the theories of international
investmentinvestment To understand policy framework to To understand policy framework to
promote FDIpromote FDI To discuss patterns of FDITo discuss patterns of FDI
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Significance of FDISignificance of FDI
International trade and foreign direct International trade and foreign direct
investment (FDI) are the two most important investment (FDI) are the two most important
international economic activities integrating international economic activities integrating
the world economy. With the increase in the world economy. With the increase in
mobility of factors of production across mobility of factors of production across
countries, FDI has become an integral part countries, FDI has become an integral part
of firms’ strategy to expand international of firms’ strategy to expand international
business. business.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Concept of FDIConcept of FDI
In simple terms, FDI means acquiring In simple terms, FDI means acquiring
ownership in an overseas business entity. ownership in an overseas business entity.
Foreign direct investment occurs when an Foreign direct investment occurs when an
investor based in one country (the home investor based in one country (the home
country) acquires an asset in another country) acquires an asset in another
country (the host country) with the intent to country (the host country) with the intent to
manage it. manage it.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Foreign Portfolio Investment (FPI)Foreign Portfolio Investment (FPI)
An investment by individuals, firms, or a An investment by individuals, firms, or a
public body in foreign financial instruments, public body in foreign financial instruments,
such as foreign stocks, government bonds, such as foreign stocks, government bonds,
etc. etc.
In FPI, the equity stake in the foreign In FPI, the equity stake in the foreign
business entity is not significant enough to business entity is not significant enough to
exert any management control. exert any management control.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Raison d’etre for FDIRaison d’etre for FDI
Cost of transportationCost of transportation
Liability of foreignnessLiability of foreignness
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Benefits of FDI to Host CountriesBenefits of FDI to Host Countries
Access to superior technologyAccess to superior technology
Increased competition Increased competition
Increase in domestic investment Increase in domestic investment
Bridging host countries’ foreign exchange Bridging host countries’ foreign exchange
gapsgaps
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Negative Impacts of FDINegative Impacts of FDI
Market MonopolyMarket Monopoly
Crowding-out and unemployment effectsCrowding-out and unemployment effects
Technology dependenceTechnology dependence
Profit outflowProfit outflow
Corruption Corruption
National securityNational security
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Factors Affecting Selection of FDI Factors Affecting Selection of FDI DestinationsDestinations
Cost of capital input Cost of capital input
Wage rate Wage rate
Taxation regimeTaxation regime
Cost of inputsCost of inputs
Cost of logisticsCost of logistics
Market demandMarket demand
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Types of FDITypes of FDI
On the Basis of Direction of On the Basis of Direction of InvestmentInvestment
Inward FDIInward FDI: : Foreign firms taking control over Foreign firms taking control over
domestic assets.domestic assets.
Outward FDI:Outward FDI: Domestic firms investing overseas Domestic firms investing overseas
and taking control over foreign assets.and taking control over foreign assets.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
On the Basis of Types of ActivityOn the Basis of Types of ActivityHorizontal FDIHorizontal FDI: Overseas investment in a similar activity as : Overseas investment in a similar activity as
carried out in the home country.carried out in the home country.
Vertical FDIVertical FDI: Overseas investment so as either to provide inputs : Overseas investment so as either to provide inputs
for the firm’s domestic operations or sell its domestic output for the firm’s domestic operations or sell its domestic output
abroad.abroad.
• Backward Vertical FDIBackward Vertical FDI: Direct investment aimed at providing : Direct investment aimed at providing
inputs for a firm’s production processes.inputs for a firm’s production processes.
• Forward Vertical FDIForward Vertical FDI: Direct investment overseas aimed to sell : Direct investment overseas aimed to sell
the output of a firm’s domestic production processes.the output of a firm’s domestic production processes.
Conglomerate FDIConglomerate FDI: Direct investment overseas aimed at : Direct investment overseas aimed at
manufacturing products not manufactured by the firm in the manufacturing products not manufactured by the firm in the
home country.home country.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
On the Basis of Investment ObjectivesOn the Basis of Investment Objectives Resource-seeking FDIResource-seeking FDI: Direct investment : Direct investment overseas so as to gain privileged access to overseas so as to gain privileged access to resources vis-à-vis competitorresources vis-à-vis competitorMarket-seeking FDIMarket-seeking FDI: Direct investment overseas : Direct investment overseas with sizeable market and growth in order to with sizeable market and growth in order to protect existing markets, counteract competitors, protect existing markets, counteract competitors, and to preclude rivals from gaining new marketsand to preclude rivals from gaining new marketsEfficiency-seeking FDIEfficiency-seeking FDI: Direct investment : Direct investment overseas so as to improve efficiency and or seek overseas so as to improve efficiency and or seek advantages of process specialization or product advantages of process specialization or product rationalizationrationalization
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
On the Basis of Entry ModesOn the Basis of Entry Modes
Greenfield InvestmentsGreenfield Investments:: Overseas Overseas
investment to create new facilities or investment to create new facilities or
expansion of existing facilitiesexpansion of existing facilities
Merger & Acquisitions (M&As):Merger & Acquisitions (M&As): Transfer of Transfer of
existing assets of a domestic firm to a existing assets of a domestic firm to a
foreign firm that leads to mergers and foreign firm that leads to mergers and
acquisitions.acquisitions.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
On the Basis of SectorOn the Basis of Sector
Industrial FDI:Industrial FDI: Investment by a foreign firm in the Investment by a foreign firm in the
manufacturing sector.manufacturing sector.
Non-industrial FDI:Non-industrial FDI: Investment by a foreign firm Investment by a foreign firm
in services sector.in services sector.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
On the Basis of Strategic ModesOn the Basis of Strategic Modes
Export replacementExport replacement
FDI is made as a substitute for exports in FDI is made as a substitute for exports in
response to trade barriers of the host response to trade barriers of the host
country, such as import restrictions and country, such as import restrictions and
prohibitive tariff structure. prohibitive tariff structure.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Export PlatformsExport Platforms
In order to minimize a firm’s cost of In order to minimize a firm’s cost of
production and distribution, FDI is made so production and distribution, FDI is made so
as to utilize the target country to serve the as to utilize the target country to serve the
global markets. global markets.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Domestic SubstitutionDomestic Substitution
FDI aimed to obtain cheap inputs to support FDI aimed to obtain cheap inputs to support
home production.home production.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Theories of International Theories of International InvestmentInvestment
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Capital Arbitrage TheoryCapital Arbitrage Theory
FDI takes place due to differences in the FDI takes place due to differences in the
rates of return on capital across countries. rates of return on capital across countries.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Market Imperfection TheoryMarket Imperfection Theory
To access countries with market imperfections, such To access countries with market imperfections, such
as government policies, including import as government policies, including import
restrictions and quotas, incentives on exports, tax restrictions and quotas, incentives on exports, tax
regimes, and government’s participation in trade regimes, and government’s participation in trade
etc, FDI is often employed as a strategic tool for etc, FDI is often employed as a strategic tool for
international business expansion.international business expansion.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Internalization TheoryInternalization Theory
When the know-how, technology, skills, or When the know-how, technology, skills, or
trade secrets available with a firm are trade secrets available with a firm are
crucial to the firm’s competitive advantage, crucial to the firm’s competitive advantage,
it needs to protect such knowledge base it needs to protect such knowledge base
within the organization. Therefore, it within the organization. Therefore, it
expands internationally by way of FDI. expands internationally by way of FDI.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Monopolistic Advantage TheoryMonopolistic Advantage Theory
An MNE is believed to possess monopolistic An MNE is believed to possess monopolistic
advantage, which enables it to operate advantage, which enables it to operate
overseas more profitably and compete with overseas more profitably and compete with
local firms. local firms.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
International Product Life Cycle TheoryInternational Product Life Cycle Theory
The theory provides an explanation as to The theory provides an explanation as to
why the production locations are shifted why the production locations are shifted
across countries and suggests that an MNE across countries and suggests that an MNE
prefers those countries for investment as prefers those countries for investment as
manufacturing locations that have market manufacturing locations that have market
size large enough to support local size large enough to support local
production. production.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Eclectic Theory (OLI Paradigm)Eclectic Theory (OLI Paradigm)
It is a blend of macro-economic theory It is a blend of macro-economic theory
of international trade (L) and micro-of international trade (L) and micro-
economic theories of the firm (O&I). economic theories of the firm (O&I).
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
The Ownership (O) Factor The Ownership (O) Factor
Specific advantages possessed by a firm Specific advantages possessed by a firm
enabling it to reap profits from overseas enabling it to reap profits from overseas
investments. investments.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
The Location (L) FactorThe Location (L) Factor
Country specific advantage contributing to Country specific advantage contributing to
relative attractiveness of an investment relative attractiveness of an investment
destination destination
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
The Internalization (I) FactorThe Internalization (I) Factor
Retaining firm’s know-how within the Retaining firm’s know-how within the
organization rather than transferring it to an organization rather than transferring it to an
unrelated firm overseas.unrelated firm overseas.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Policy Framework to Promote FDIPolicy Framework to Promote FDI
Attracting FDI has become a key part of Attracting FDI has become a key part of
national development strategies for most national development strategies for most
countries. Such investments are often countries. Such investments are often
viewed to augment domestic capital, viewed to augment domestic capital,
employment, and productivity, leading to employment, and productivity, leading to
economic growth. economic growth.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Major Regulatory Measures & Incentives Major Regulatory Measures & Incentives to Promote FDIto Promote FDI
Screening, admission, and establishmentScreening, admission, and establishment
Fiscal incentivesFiscal incentives
Financial incentivesFinancial incentives
Other incentives, such as subsidized Other incentives, such as subsidized
service fees, subsidized designated service fees, subsidized designated
infrastructure infrastructure
Performance requirements Performance requirements
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Promotion of FDI in IndiaPromotion of FDI in IndiaInstitutional frameworkInstitutional framework
The Department of Industrial Policy and The Department of Industrial Policy and
Promotion plays an active role in investment Promotion plays an active role in investment
promotion through dissemination of promotion through dissemination of
information on investment climate and information on investment climate and
opportunities in India. It also advises opportunities in India. It also advises
potential investors about investment potential investors about investment
policies, procedures, and opportunities and policies, procedures, and opportunities and
helps resolve problems faced by foreign helps resolve problems faced by foreign
investors. investors.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Policy FrameworkPolicy Framework
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
•FDI ProhibitedFDI Prohibited
• Retail trading (Except single brand product Retail trading (Except single brand product retailing)retailing)
• Atomic energyAtomic energy• Lottery businessLottery business• Gambling and betting sectorGambling and betting sector• Business of chit fund and Business of chit fund and nidhinidhi company company• Plantation except tea Plantation except tea • Trading in Transferable Development Rights Trading in Transferable Development Rights
(TDR)(TDR)• Activity/ sector not opened to private sector Activity/ sector not opened to private sector
investmentinvestment
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
FDI up to 24 per cent allowedFDI up to 24 per cent allowed
• Manufacture of items reserved for small Manufacture of items reserved for small sector upto 24 per centsector upto 24 per cent
FDI up to 26 per cent allowedFDI up to 26 per cent allowed
• FM broadcastingFM broadcasting• Up-linking a news and current affairs TV Up-linking a news and current affairs TV
channelschannels• Defence productionDefence production• InsuranceInsurance• Publishing of news papers and Publishing of news papers and
periodicalsperiodicals
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
FDI upto 49 per cent allowedFDI upto 49 per cent allowed
• BroadcastingBroadcasting Setting up hardware facilitiesSetting up hardware facilities Cable networkCable network:: Direct to Home (DTH)Direct to Home (DTH): :
• Scheduled Air transport services Scheduled Air transport services • Commodity exchangesCommodity exchanges• Credit information companies Credit information companies • Refining in case of PSUs Refining in case of PSUs • Asset reconstruction companies Asset reconstruction companies
FDI up to 51 per cent allowedFDI up to 51 per cent allowed
• Single brand product retailingSingle brand product retailing
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
•FDI up to 74 per cent allowedFDI up to 74 per cent allowed
• ISP with gateways, radio-paging, and ISP with gateways, radio-paging, and end-to-end bandwidthend-to-end bandwidth
• Establishment and operation of satellitesEstablishment and operation of satellites• Private sector bankingPrivate sector banking• Telecommunications servicesTelecommunications services• Non-scheduled Air transport services, Non-scheduled Air transport services,
ground handling servicesground handling services
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Foreign direct investment up to 100 per Foreign direct investment up to 100 per cent allowed cent allowed with prior government with prior government approvalapproval subject to conditions: subject to conditions:
• Trading:Trading: • Courier servicesCourier services• Tea sector, including tea plantation: Tea sector, including tea plantation: • ISP without gateway, infrastructure ISP without gateway, infrastructure
provider, electronic mail, and voice mail: provider, electronic mail, and voice mail: • Mining and mineral separation of titanium Mining and mineral separation of titanium
bearing minerals and ores, its value addition bearing minerals and ores, its value addition • Cigars and cigarettes manufactureCigars and cigarettes manufacture• Airports- existing projects with prior Airports- existing projects with prior
government approval beyond 74 per cent government approval beyond 74 per cent • Up-linking of a non-news and current affairs Up-linking of a non-news and current affairs
TV channels TV channels • Investing companies in infrastructure/ Investing companies in infrastructure/
services sector (except telecom sector)services sector (except telecom sector)• Publishing of scientific magazines, specialty Publishing of scientific magazines, specialty
journals and periodicalsjournals and periodicals
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Foreign Direct Investment allowed up to Foreign Direct Investment allowed up to 100 per cent under automatic route100 per cent under automatic route• Agriculture sectorAgriculture sector• Industrial sectorsIndustrial sectors
MiningMining Manufacturing activitiesManufacturing activities Petroleum sectorPetroleum sector PowerPower Special Economic Zones and Free Trade Special Economic Zones and Free Trade
Warehousing ZonesWarehousing Zones Industrial Parks Industrial Parks Construction development projectsConstruction development projects
• ServicesServices• Civil aviationCivil aviation• Non banking finance companiesNon banking finance companies• Trading Trading
• In sectors/ activities not listed above, FDI is In sectors/ activities not listed above, FDI is permitted upto 100 per cent through permitted upto 100 per cent through automatic routeautomatic route
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
PatternsPatterns of of FDIFDI
Flow of FDI:Flow of FDI: The amount of FDI undertaken over a The amount of FDI undertaken over a given time period (for example, a year). If the given time period (for example, a year). If the investment is made by a foreign firm in a country, investment is made by a foreign firm in a country, known as inflow of FDI whereas investment made known as inflow of FDI whereas investment made overseas is termed as outflow of FDI. overseas is termed as outflow of FDI. The total accumulated value of foreign owned The total accumulated value of foreign owned assets at a given time is termed as stock of FDI. FDI assets at a given time is termed as stock of FDI. FDI comprises of equity capital and re-invested earnings comprises of equity capital and re-invested earnings as per IMF norms. Besides, capacity expansion as per IMF norms. Besides, capacity expansion financed by firms of foreign origin as well as short-financed by firms of foreign origin as well as short-term or long-term loans that form part of original term or long-term loans that form part of original packages are also treated as FDI.packages are also treated as FDI.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Components of FDI FlowsComponents of FDI Flows
FDI is mainly financed by TNCs throughFDI is mainly financed by TNCs through
Equity capitalEquity capital
Intra-company loans Intra-company loans
Reinvested earningsReinvested earnings
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
FDI Performance IndicesFDI Performance Indices
For carrying out cross-country comparison of For carrying out cross-country comparison of
FDI performance and FDI potential, the FDI performance and FDI potential, the
UNCTAD’s FDI performance and potential UNCTAD’s FDI performance and potential
indices serve as useful toolsindices serve as useful tools
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Inward FDI Performance Index:Inward FDI Performance Index: Measure of Measure of
the extent to which a host economy receives the extent to which a host economy receives
inward FDI relative to its economy size.inward FDI relative to its economy size.
Outward FDI performance index: Outward FDI performance index: The ratio The ratio
of a country’s share in global FDI outflows to its of a country’s share in global FDI outflows to its
share inshare in
the world GDP.the world GDP.
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
FDI Trends in IndiaFDI Trends in India
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Sector-wise Composition of FDI Sector-wise Composition of FDI InflowsInflows
Figure : Sectorwise Composition of FDI Inflows*
Metallurgical Industries3.7%
Automobile Industry4.0%
P ower4.1%
Housing & Real Estate5.8%
P etroleum & Natural Gas3.1%
Chemicals2.3%
others30.6%
Telecommunications6.3%
Construction Activities6.7%
Computer Software & Hardware
11.5%
Services Sector22.0%
**Figures for April 2000 to May 2008Figures for April 2000 to May 2008Source: Fact sheet on FDI, Department of Industrial Policy Source: Fact sheet on FDI, Department of Industrial Policy
and Promotion, and Promotion, Government of India, New Delhi, Government of India, New Delhi, 20082008
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Country wise FDI InflowsCountry wise FDI Inflows
Figure: Country-wise Composition of FDI Inflows*
others24.6%
UAE1.1%
J apan3.1%
Netherlands4.0%
Germany2.3%
Cyprus1.7%
France1.4%
UK6.5%
Singapore7.1%
USA7.6%
Mauritius40.6%
**Figures for April 2000 to May 2008Figures for April 2000 to May 2008Source: Fact sheet on FDI, Department of Industrial Policy and Promotion, Source: Fact sheet on FDI, Department of Industrial Policy and Promotion,
Government of India, New Delhi, 2008Government of India, New Delhi, 2008
Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi
Chapter 12: Foreign Direct Chapter 12: Foreign Direct InvestmentInvestment
Foreign Direct Investment in Retail Foreign Direct Investment in Retail SectorSector
India is the second largest market in the India is the second largest market in the
world after China and it fascinates global world after China and it fascinates global
retailers to invest. It has opened up FDI upto retailers to invest. It has opened up FDI upto
51% in retail trade to “single brand 51% in retail trade to “single brand
products” from Feb, 2006. products” from Feb, 2006.
top related