Foreign Direct Investment (FDI) and Financial Integration

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Investment in a country by individuals and organisations from other countries may take the form of direct investment (creation of productive facilities) or portfolio investment (acquisition of securities). Foreign direct investment (FDI) is the outcome of the mutual interests of multinational firms and host countries. The essence of FDI is the transmission to the host country of a package of capital, managerial skills, and technical knowledge. FDI is generally a form of long-term international capital movement, made for the purpose of productive activity and accompanied by the intention of managerial control or participation in the management of a foreign firm. This book attempts to explain and statistically examine the various dimensions of FDI with reference to India. It also includes chapters on portfolio investment, financial integration, international investment position (IIP) of South Asian countries, and international financial integration of high income European Union (EU) countries. Dr. Abhijit Bhattacharya is currently Assistant Professor of Economics, Pingla Thana Mahavidyalaya, Paschim Medinipur, West Bengal. He holds M.A., M.Phil., and Ph.D. degrees in Economics. He successfully completed a research project on Global Financial Crisis funded by the University Grants Commission (UGC), New Delhi. He has contributed articles in journals and chapters in various books edited by eminent scholars. He has attended and presented papers at international and national level conferences and seminars. Foreign investment, an important source of non-debt finance, is a subject of topical interest. Countries of the world, particularly developing economies, are vying with each other to attract foreign capital to boost their domestic rates of investment and also to acquire new technology and managerial skills. 1. Foreign Direct Investment (FDI): Theoretical Settings 1.1 Globalization and Cross-border Investments 1.2 FDI and Portfolio Investment 1.3 Superiority of FDI over Other Forms of Capital Inflows 1.4 Resource-seeking, Market-seeking and Efficiency-seeking FDI 1.5 Crowding-in and Crowding-out Impacts of FDI 1.6 Advantages of FDI for the Host Country 1.7 Disadvantages of FDI for the Host Country 1.8 World Bank Determinants of FDI 2. Domestic, Regional and International Financial Integration 2.1 Integration of Financial Markets 2.2 Domestic Financial Integration 2.3 Regional Financial Integration (Asia) 2.4 International Financial Integration 3. International Investment Position (IIP) of India 3.1 What is International Investment Position (IIP)? 3.2 Definitions of Various Components 3.3 Literature Review 3.4 Why is Inflow of Foreign Assets Needed? 3.5 Variables and Analysis 4. International Financial Integration (IFI) of India 4.1 Types of International Flows of Capital 4.2 Financial Integration 4.3 Literature Review 4.4 Different Measures of IFI 4.5 Descriptions of the Components of IFI 4.6 International Financial Integration of India 5. Financial Leveraging of India 5.1 Indications of Financial Leveraging of India 6. General Conditions, Legislations, Rules and Regulations Governing FDI 6.1 Economic Reforms and FDI 6.2 Regulatory Framework 6.3 Entities Eligible to Invest in India 6.4 Entities into Which FDI Can Be Made (i.e. Eligible Investee Entities) 6.5 Entry Routes for Investment 6.6 Caps on Investments 6.7 Important Rules and Regulations Governing Foreign Investments in India 6.8 Post-approval Procedures 6.9 Entry Options for Foreign Investors 7. Sector-specific Caps and Conditions on FDI for Permitted Sectors 7.1 Prohibited Sectors 7.2 Permitted Sectors 7.3 FDI in Agriculture and Allied Sectors 7.4 FDI in Mining, Petroleum and Natural Gas 7.5 FDI in Defence Industry 7.6 FDI in Services Sector 7.7 FDI in Financial Services 7.8 FDI in Pharmaceuticals 8. Favourable Factors for FDI in India 8.1 Why FDI is Important for India? 8.2 World Investment Report, 2020 and India 8.3 Large and Expanding Size of the Market 8.4 US and Western World’s Disenchantment with China 8.5 Ease of Doing Business 8.6 Digital Revolution 8.7 Well-managed Public Finances 8.8 Robust and Resilient Financial System 8.9 Strong and Diversified Industrial, Infrastructural and Logistics Base 8.10 Rising Innovations Ranking 8.11 Start-up Hub 8.12 Realistic Exchange Rate and Sufficient Foreign Exchange Reserves 8.13 Political Stability and Cordial International Relations 9. Foreign Portfolio Investment 9.1 Advantages of Portfolio Investment Inflows 9.2 Disadvantages of Portfolio Investment Inflows 9.3 Liberalisation of Portfolio Investment Flows into India 10. International Investment Position (IIP) and International Financial Integration (IFI) of South Asian Countries 10.1 Introduction 10.2 Review of Literature 10.3 Growth of Assets and Liabilities: Some Stylized Facts 10.4 Conclusion 11. Determinants of International Financial Integration (IFI) of 12 European Union (EU) Countries 11.1 Introduction 11.2 Review of Literature 11.3 Concepts, Measures and Trends of International Financial Integration 11.4 Summary and Conclusion Bibliography Index

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