Global Leader in Foreign Direct Investments Essay

This address focused on the extraneous Direct Investments (FDI) of India relative to china, unneurotic with its backstage-enterprise(a) advantages and the underlying factors which set them apart. In addition, strategies in which India can further strengthen its competitive advantage were exposit together with the best approaches to keep at par or clear china in terms of its FDI dominance.This chapter presented the background of the research problem, the research questions that the dissertation aimed to behave, significance of the study, the dissertations adopted research design and methodology, together in which how the sections in this dissertation were organized. 1. 1 Background of the Problem The great deal of foreign direct investments in Asian countries is primarily determined by the privatization and at the alike time the globalization of production.The degree of political stability, presidential term policies, together with trade and investment regimes allowed host countries to be very centripetal in terms of FDI investments. Due to the liberalization of the developing countries economies, the Global increment Finance of the World Bank in 1999 claimed that FDI flows to developing countries have change magnitude more than six times (Chakraborty and Basu, 2002).Foreign direct investments have bloomed for two China and India by more than 1,500 percent between 1990 and in the young years, and both countries have growing domestic considerable consumer markets, both economies ar starting to produce higher value 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 mention that India or China being a more well-heeled destination for FDIs should be closely taken into consideration. It could be far-famed that there are business ventures that a re proven to be more advantageous exclusively in only one of the countries even though the same offers the same services. On another perspective, specific business ventures could experience a relatively highly specialized output given for instance that much(prenominal)(prenominal) would be deployed in the right geographic location (Laudiciana and White, 2005).It could be noted that India has undergone remarkable international integration and development over the past few years. Since 1991, after the external payment crisis in India, there has been liberalization of diverse policies implemented by the government. In turn, the current investment climate has attracted more another(prenominal) foreign investors in the country in various sectors. As much(prenominal) 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 supremacy and eventually business profitability.On the other hand, it cou ld be traced back that China started its state-led modernization reform in the late 1970s 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 principally consists of capital 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 wedge continent is very vital.Thus 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 put to work the inflows and stocks of the aforementioned? 2. What are the effects of FDI inflows and stocks to the economy of India? 3. How w ill India develop a competitive advantage in terms of its FDI and take over China as a leader in FDI in the future?