Inward Foreign Investments in India and China: A Comparative Perspective

Bibek Ray Chaudhuri

India and China have been the major recipients of FDI inflows in the last two decades. The level and growth of the flows though have been much higher for China than India. This phenomenon have given rise to a huge literature exploring the reasons for such divergence. Data shows that the matters have compounded after the global financial crisis. During the crisis year the gap was almost eliminated. Interestingly, after the crisis year the flows diverged sharply with increase for China and slow down for India. This was even when China was more affected initially by the crisis than India. The paper thus takes a fresh look at the factors responsible for the divergence in FDI inflows to the two countries especially after the Global Financial Crisis. Simple correlations between probable determinants and FDI flows for both the countries have been used to understand the causes of the divergence and their implications.

Bibek Ray Chaudhuri Dr. Bibek Ray Chaudhuri has a research and teaching experience of over nine years. He has a Ph.D degree in Economics from the Jawaharlal Nehru University, New Delhi. He Joined Indian Institute of Foreign Trade (IIFT) in January, 2006 as an Assistant Professor in Economics and Trade Policy. Prior to this appointment he was a “Consultant” with National Council of Applied Economic Research (NCAER) in Industry Division. He is/was involved in a number of research projects sponsored by Ministry of Commerce, Government of India, State Governments and International Institutions. He has published two Reports in the form of book (co-authored) on “E-readiness Assessment of Indian States,” sponsored by Infodev, The World Bank. Apart from this he has published research papers in various journals. He has published papers in Journal of Industrial Statistics, Abhigyan among others. He is a reviewer of the Management Journal of the Department of Business Management, University of Calcutta and Foreign Trade Review, IIFT. Apart from Trade and Investment his research interest includes “Microfinance” both theoretical and empirical aspects. He has completed a project on “Capital structure and Microfinance Institutions’ performance” sponsored by Global Development Network.