FDI and FII
Post 1 of 5
Folks,
I came across a very good article regarding Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) in the newspapers today.
The link is as follows:
http://economictimes.indiatimes.com/articleshow/1593680.cms
Regards,
I came across a very good article regarding Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) in the newspapers today.
The link is as follows:
http://economictimes.indiatimes.com/articleshow/1593680.cms
Regards,
13 Feb 2007 01:37
Post 2 of 5
Quoting from [rchas]:
Folks,
I came across a very good article regarding Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) in the newspapers today.
The link is as follows:
http://economictimes.indiatimes.com/articleshow/1593680.cms
Regards,
In addition to this you may give a brief description about FDI and FII
and what is the influence of that in one countries economy and industry developement:
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15 Feb 2007 07:35
Post 3 of 5
Replying to [curdrice]:
" ..you may give a brief description about FDI and FII
and what is the influence of that in one countries economy and industry developement."
These questions are answered in the article itself.
However, let me explain these terms in a simple manner. Crudely speaking, FDI is when a foreign company brings capital into a country or an economy to set up a production or some other facility. FDI gives the foreign company some control in the operations of the company.
In contrast, FII is when a foreign company buys equity in a company through the stock markets. Therefore, in this case, FII would not give the foreign company any control in the company.
Regards,
" ..you may give a brief description about FDI and FII
and what is the influence of that in one countries economy and industry developement."
These questions are answered in the article itself.
However, let me explain these terms in a simple manner. Crudely speaking, FDI is when a foreign company brings capital into a country or an economy to set up a production or some other facility. FDI gives the foreign company some control in the operations of the company.
In contrast, FII is when a foreign company buys equity in a company through the stock markets. Therefore, in this case, FII would not give the foreign company any control in the company.
Regards,
16 Feb 2007 05:27
Post 4 of 5
Replying to [rchas]:
Inflow of foreign capital, whether in the form of FDI or FII, is good for any recipient (developing) country provided they are allowed in a measured way. If FDIs are invited more in the infrastructure sectors, it could prove to be a boom for the economy. But if these capital inflows come more in the consumer sectors, chances are that in the long run it could be proved to be disastrous for the economy/country. For example, in short, if the recipient country of FDIs invites more and more capital into the automobile sector to have vast varities of cars, s , motorcycles etc. in the country (as discussed in the article), but if the growth of the automobile sector is not matched by the proper roads as well as the capacity of the country to generate or import petrol or diesal, at a macro level, the growth of automobile sector might prove to be a liability for the country simply because the country will be more dependent on the international markets for buying petrol/diesal. Poor roads, inefficient and outdated railway's technology, outdated railways tracks etc. etc. will add the consumption of pertol/diesel. This way whatever would come in as a foreign exchange through an inflow of foreign capital will be drained out in buying petrol/diesal from international markets for sheer consumption purposes. Similar cases could be in other sectors too.
Therefore, a meticulous economic studies by the eminent economists and their proper implementations become essential to maintain the proper balance between the growth of consumer sector and the infrastructure sector to enjoy the best possible fruits of foreign capital inflows whether through FDIs or FIIs.
Inflow of foreign capital, whether in the form of FDI or FII, is good for any recipient (developing) country provided they are allowed in a measured way. If FDIs are invited more in the infrastructure sectors, it could prove to be a boom for the economy. But if these capital inflows come more in the consumer sectors, chances are that in the long run it could be proved to be disastrous for the economy/country. For example, in short, if the recipient country of FDIs invites more and more capital into the automobile sector to have vast varities of cars, s , motorcycles etc. in the country (as discussed in the article), but if the growth of the automobile sector is not matched by the proper roads as well as the capacity of the country to generate or import petrol or diesal, at a macro level, the growth of automobile sector might prove to be a liability for the country simply because the country will be more dependent on the international markets for buying petrol/diesal. Poor roads, inefficient and outdated railway's technology, outdated railways tracks etc. etc. will add the consumption of pertol/diesel. This way whatever would come in as a foreign exchange through an inflow of foreign capital will be drained out in buying petrol/diesal from international markets for sheer consumption purposes. Similar cases could be in other sectors too.
Therefore, a meticulous economic studies by the eminent economists and their proper implementations become essential to maintain the proper balance between the growth of consumer sector and the infrastructure sector to enjoy the best possible fruits of foreign capital inflows whether through FDIs or FIIs.
19 Feb 2007 10:27
Post 5 of 5
Replying to [vshanker]:
You have offered some very good inputs. I guess that is why countries have to be careful when they formulate new policies. They also have to measure the effects of these policies and take remedial action if the policy does produce the intended results.
In the case of FDI, if the policy is changed after foreign companies have invested in a country, they may cry foul. As a result, the country's reputation in the international arena would take a hit.
Just my 2 cents.
Regards,
You have offered some very good inputs. I guess that is why countries have to be careful when they formulate new policies. They also have to measure the effects of these policies and take remedial action if the policy does produce the intended results.
In the case of FDI, if the policy is changed after foreign companies have invested in a country, they may cry foul. As a result, the country's reputation in the international arena would take a hit.
Just my 2 cents.
Regards,
19 Feb 2007 23:27
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