MUSINGS

Reasons for the Increased Foreign Direct Investments The factors that propel sustained  economic development  have not changed with time. They include the generation and efficient allocation of capital and labor, application of technology and the creation of skills and institutions. These fact determine how well each economy uses its endowments and adds to them. They also affect how flexibly and dynamically each country responds to changing economic conditions. However, the global context for development has changed enormous the past decades. These changes affect not only the role of Foreign Direct Investment (FDI) in host countries, but also government policies on FDI. The following three are of particular significance. 1. The Nature and Pace of Knowledge (Technological Knowledge Change) The  creation and diffusion of productive knowledge  have become central to growth and development. “ Knowledge ” includes not...

1. Introduction to Foreign Direct Investment: After independence there was serious efforts in India to strengthen the economy, the first reform was the nationalization of commercial banks (1969) even though there were lacks in the money market in reshaping and revamping the economy. The sea change could be seen after the economic reforms 1991 well-known as LPG (liberalization, privatization and globalization). The Indian economy has now reached in the orbit of high rate of economic growth. ADVERTISEMENTS: It is passing through the second economic reforms; primarily this phase of reforms was concerned with increasing transparency and accountability of the country’s financial sector. The main purpose of the reforms was to bring better integration of banking, insurance and other financial agencies so that capital market in India can function smoothly. FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity of the economy. It involves in...