Global Leader in Foreign Direct Investments Essay

This speaking focused on the Foreign Direct Investments (FDI) of India congenator to main(prenominal)land china, together with its warring advantages and the underlying factors which set them apart. In addition, strategies in which India can further strengthen its competitive advantage were elaborated together with the best approaches to keep at par or surpass China in terms of its FDI dominance.This chapter presented the background of the research problem, the research questions that the dissertation aimed to answer, significance of the study, the dissertations adopt research design and methodology, together in which how the sections in this dissertation were organized. 1. 1 Background of the Problem The zoom along of foreign say investments in Asian countries is primarily determined by the privatization and at the similar snip the globalization of production.The degree of political stability, government policies, together with trade and investment regimes allowed host cou ntries to be actually open in terms of FDI investments. Due to the liberalization of the developing countries economies, the Global Development Finance of the institution Bank in 1999 claimed that FDI flows to developing countries have increased more than six times (Chakraborty and Basu, 2002).Foreign direct investments have bloomed for some(prenominal) China and India by more than 1,500 percent between 1990 and in the recent years, and both countries have growing house servant considerable consumer markets, both economies ar starting to produce higher harbor products and develop networks to maintain competitive advantages beyond mere cost (Laudiciana and White, 2005). Both India and China share the same level of competitiveness in terms of FDI attractiveness among multinational companies.However, it could be say that India or China being a more favorable destination for FDIs should be closely caren into consideration. It could be noted that there are agate line ventures tha t are proven to be more profitable exclusively in only one of the countries even though the aforementioned offers the same services. On another perspective, specific telephone circuit ventures could experience a relatively highly specialized output given for instance that such would be deployed in the right geographic location (Laudiciana and White, 2005).It could be noted that India has undergone remarkable international integration and learning over the past few years. Since 1991, after the external payment crisis in India, there has been liberalization of mixed policies implemented by the government. In turn, the current investment climate has attracted many foreign investors in the boorish in various sectors. As such it is with this respect that competitive advantages possessed both by India with China, could be noted as it plays a vital role in terms of the success and eventually business profitability.On the other hand, it could be traced back that China started its state-l ed modernization reform in the late seventies after many years of operating according to the Soviet model. Contrasting this to India, the aforementioneds main reform started after 1991 after which relied largely on the private sector. Chinas FDI mainly consists of jacket intensive flows whereas Indias FDI is mainly skill intensive (Laudiciana and White, 2005). The impact of such investment has on the domestic economy and the experience of the multinationals with the overall business environment in the sub continent is very vital. then it becomes necessary to study the impact of such inflows as it has important policy implications. 1. 2 Research Questions The dissertation aims to answer the following questions 1. What are the factors that differentiate Indias and Chinas FDI performances that influence the inflows and stocks of the aforementioned? 2. What are the effects of FDI inflows and stocks to the economy of India? 3. How will India develop a competitive advantage in terms of i ts FDI and take over China as a leader in FDI in the future?