ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Focal PointsSubscribe to Focal Points

Foreign Direct Investment and Domestic Savings-Investment Behaviour-Developing Countries Experience

Savings-Investment Behaviour Developing Countries' Experience Biswajit Dhar Saikat Sinha Roy Two main arguments have been advanced in support of the role of foreign direct investment (FDl) in stimulating growth processes in developing countries. The first, essentially a short-term view, maintains that FDI can help mitigate problems encountered in external debt management. The second takes a longer-term perspective while arguing that FDl has the potential of meeting the domestic resource gaps of developing countries thereby enhancing their growth prospects. This paper examines these two views by looking at the experience of 16 developing countries which have attracted the largest flows of FDl and have the largest stocks of FDl in the developing world.

Explaining Post-Reform Industrial Growth

C P Chandrasekhar A close scrutiny of the estimates of capital formation in the post-reform period shows that no linkage can be established between liberalisation, private investment and industrial growth. What liberalisation has done is to unleash a consumption boom, fuelled by a surge in consumer credit that has accompanied financial sector reform. Such a boom not only increases balance of payments vulnerability, but also offers, in terms of markets, only a once-for all boost that would exhaust itself unless some other stimuli ensure expansion of the home market for manufacturers.

Too Little, in the Wrong Places-Mega City Programme and Efficiency and Equity in Indian Urbanisation

Mega City Programme and Efficiency and Equity in Indian Urbanisation Sanjoy Chakravorty The first major urban policy initiative announced after the government of India began the economic liberalisation process was the Mega City programme, directed by the ministry of urban affairs and employment. It is an attempt to shore up infrastructure in five of the six largest metropolitan regions in India (Bombay, Calcutta, Madras, Hyderabad and Bangalore), using innovative financing mechanisms, and emphasising cost recovery. After detailing the political- economic background, the programme and its implementation, three critical questions are considered: one, is the amount of money being invested too little, and has it come too late to turn the situation around? Two, is the programme being targeted to the wrong cities? And, three, will the elite continue to remain beneficiaries, and the urban poor neglected? The answers to these questions raise doubts about the Mega City programme. Since the reforms will have to succeed in the cities (if they are to be durable), urban development policies must be considered with a view to sustaining efficient and, specially, equitable urbanisation patterns.

India s Capital Market Growth-Trends, Explanations and Evidence

Trends, Explanations and Evidence R Nagaraj This study, first, documents India 's capital market boom, and its proximate causes. What does it mean for the economy and private corporate sector? It is largely disintermediation: household sector substituted 'shares and debentures' for bank deposits, and corporate sector securitised its debt. There is no association between growth rates of the capital market mobilisation and aggregate saving rate, corporate physical investment and value added. Long-term decline in the contribution of internal finance to corporate fixed investment and in profitability in 1980s are noted, despite a fall in ratio of corporate tax to gross profit. The study concludes by raising some questions.
Back to Top