Besides, studies have revealed that FDI is an important vehicle
for the transfer of technology, thus contributing to growth of
the host economy. To be competitive, FDI has to be more
productive than the domestic investment and therefore, it
develops minimum threshold level of human capital. FDI also
contributes to an increase in the rate of investment in the
economy.
However, as
opposed to FDI, observes Chopra, portfolio investment does not
represent any commitment except profits. By investing in
fast-growing companies, the investment creates price anomalies.
Since portfolio investment represents short-term inflow of
capital, therefore it creates volatility in stock as well as in
the foreign exchange market.
In the light of
those controversies and when developing countries are competing
for foreign investment, a detailed perspective on foreign
investment is gravely needed. It is in this light that the study
"Foreign Investment in India: Liberlisation and WTO-The
Emerging Scenario" by Chopra is timely and relevant. The
study sheds light on the significance of foreign investment for
emerging markets. She aptly describes how foreign investment
helps in the economic development of host country by increasing
financial resources, providing technology and enhancing
professional skills and deliberates on theoretical
underpinnings. The study elaborates on the changing policy
perspective on foreign investment in India. The statistical
profile and analysis provided in the study is revealing.
The chapter on
non-resident Indians investment in India is thought provoking
and provides the policy variables to attract NRI investments.
The study also discusses the role of foreign institutional
investors (FII) in the stock market developments and analyses
how Euro issues phenomenon has emerged after
liberalization so that the industry is able to mobilize finance
at competitive cost. The study deliberates how the firms shifted
from Euro issues to external commercial borrowings A chapter on
the tax-related issues in respect of foreign investment discuses
how the tax incentives to FDI make the investment competitive
against domestic companies. In the next chapters, Chopra models
foreign direct investment and portfolio investment, where she
discusses the determinants of two types of investments. After
discussing the macro-economic impact of portfolio investment,
she indulges in the discussion on the impact of foreign direct
investment in India.
Since the WTO
regime is to be fully operational in coming two years, she
discusses the flow of investment in the context of TRIMs, GATs,
TRIPs and highlights the implications of proposed agreements on
FDI. Finally, Chopra concludes the study with observations and
policy implications of the study.
Besides
significance of direct foreign investment, the book includes
statistical profile and analysis, investments by NRls, foreign
institutional investors and the stock market development in
India. The chapters on the changing Foreign Investment: The
Policy Challenge for Developing Countries; Significance Of
Foreign Investment in Emerging Economies and the Globalization
Process; Foreign Direct Investment and the Economic Development
of Host Countries and India’s Policy towards Foreign Capital
are really thought provoking.
The book would be
of immense use to all interested in the study of foreign
investment in India and to the policymakers and students of
management, commerce and economics.
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