Tuesday, May 26, 2020
Values and Morality in Literary Works My theme that I have found in every short story, poem, play and many other works was values or morality. At first I didnt realize that there was anything but love in all the works. Without the help of Mr. Johnson, I would have never thought that there was anything but love in most of the works. As I read the works again I realized that there was more in the works besides love. I found out that there were morals and values but I didnt notice it because of the fact that I didnt think of them as morals but as societys standards. In my case there are a lot of morals I follow that many people dont think of morals. Dont get me wrong, I am not an angel, I am far away from it. I thinkÃ¢â¬ ¦show more contentÃ¢â¬ ¦I just think it all depends on where you come from and your societies. It may also depend on your experiences in life because we all have different experiences that change our opinion on fiction. Short story has a plot, which means the order of actions. Action involves conflict and it falls into same five parts that are in plays. Which are: Exposition, rising action, turning point, falling action and conclusion. The first short story that I read is named Dreams by Timothy Findley. This story has one obvious moral that was broken, which is the biggest one of all in people eyes, murder. At least in my eyes, that is a sin and I honestly think it is in most peoples minds. People just dont kill people because they are angry with a person, I think that is very senseless. I think Dreams is fiction because individuals cant murder people in dreams. Although, strangely I heard of stories which people could leave their bodies during meditating but never about killing. As crazy as it sounds I am not sure if this is fiction or non-fiction but I think it is more fiction. In this case, it didnt offend me at all because it was hard to believe someone can do that. If that was the case there would be many more murders in our life and there would be no pr otection against dream. Dreams is a short story that shows many things of which are morals. Another short story that better shows morals as an issue is The Cask of Amontillado by Edgar AllanShow MoreRelatedThe Definition Of Obscenity And Obscenity Laws Constructed From Community Standards1645 Words Ã |Ã 7 Pagesobscene if it meets these three criteria: (1) whether the average person, applying contemporary community standards, would find that the work appeals to the prurient interest, (2) whether the work depicts or describes, in an offensive way, sexual conduct or excretory functions, and (3) whether the work lacks serious literary, artistic, political, or scientific value. In comparison, profanity can be defined as offensive behavior or language that disrespects a religious or moral view. Vulgarity is typicallyRead MoreEliot s Argument For Moral Judgement870 Words Ã |Ã 4 Pagesrelatively easy for him to judge the morality of this work, whereas EliotÃ¢â¬â¢s time is Ã¢â¬Å" an age in which no two writers need agree about anythingÃ¢â¬ (Eliot 212). For this reason, Eliot laments that readers in his age must endeavor to Ã¢â¬Å"discount [the] attraction or repulsionÃ¢â¬ of Ã¢â¬Å"the ideas, as well as the personality of the authorÃ¢â¬ (Eliot 212). Yet in JohnsonÃ¢â¬â¢s age, the relatively homogenous value system, Eliot believes, frees Johnson from the struggle to dissociate the work from the authorÃ¢â¬â¢s idea. Johnson canRead MoreFamous American Authors: Ralph Waldo Emerson, Edgar Allan Poe, and Nathanial Hawthorne554 Words Ã |Ã 3 PagesThe period of the late eighteenth century and beginning of the nineteenth was cosidered the Romantic era in Europe and in America. This movement was a large scale rebellion against the Englightment period ideas where science and logic ruled the literary arts. Authors took several approaches on how to convey to the readers social and metaphysical opinions through the tone in a series of novels published. Ton e is apparent in much of the American Romantic era writing including that of Ralph Waldo EmersonRead MoreThe Roaring Twenties By F. Scott Fitzgerald1263 Words Ã |Ã 6 Pagesof the most dramatic and energetic times in American history. To many, the symbols of the roaring Twenties were F. Scott Fitzgerald and his wife, due to their tales of the young and the wealthy (Hanson 96). The Roaring Twenties influenced many literary works, throughout the 1920s such as F. Scott FitzgeraldÃ¢â¬â¢s The Great Gatsby and This Side of Paradise. At the start of the 1920s, prohibition had just begun, banning the purchase, sale, and manufacture of alcohol. This actually had adverse effects asRead MoreDoes Fiction Build the Morality of Individuals and Societies, or Does It Break It Down?947 Words Ã |Ã 4 PagesIn this day and age we spend an extensive amount of time engrossed in literary works, films, television shows and other forms of fiction. Some see this in a positive light, contending that fictitious stories cultivate our mental and moral development. Others however have argued that fiction is mentally and ethically obstructive. Posing the age old question: Does fiction build the morality of individuals and societies, or does it break it down? Ã¢â¬Å"The goal, I suppose, any fiction writer has, no matterRead MoreThe Interesting Narrative of the Life of Olaudah Equiano1521 Words Ã |Ã 7 PagesThe novel The Interesting Narrative of the Life of Olaudah Equiano exists as an extremely important work in the abolitionist movement in England. As an 18th century narrative written by a former black slave the novel provides a glimpse into the lives of the African slaves involved in the slave trade as well as the slave traders themselves. Even with the controversy over the authenticity of EquianoÃ¢â¬â¢s claims on his origin in Africa and his subsequent voyage through the Middle Passage, this novel servesRead MoreFrederick Douglass s Narrative Of The Life Of Fredrick Douglass, An American Slave1434 Words Ã |Ã 6 PagesAs the most famous abolitionist African American leader, Fredrick Douglass is a political, historical, and literary figure whose words still reverberate the true meaning of freedom and political, economic, and socia l equality for all. Born a slave, Douglass was able to recount his story to a pre-Civil War American public, which had a tremendous effect on the views whites had about slavery and its role in American society. Douglass became a self-educated man as he grew up within the entanglementsRead MoreThe New Exciting Beauties Of Mary Fleming s The Airship Party 1703 Words Ã |Ã 7 Pagesof all the BYP; to push limits to experience beauty through numbed senses. Collectively, they set themselves on the path to ugliness and death by striving for what they cannot obtain. Thus in not letting his work languish in beautiful description, Waugh allows the ugliness of characters morality shine through more terribly and effectively. Alongside these absences of expected senses of beauty, Waugh denies himself an avenue of including vivid description of female characters, with any presentationRead MoreSpeech on Hamlet869 Words Ã |Ã 4 PagesIs it the craftsmanship, the ideas or both that produces literature that has the power to endure over time and place? Ã¢â¬ ¢ Craftsmanship and ideas both equally share the process of taking an established work in a place and having it continue over time as the same piece of literature. Ã¢â¬ ¢ However, it is the ideas that change over time and place, as new ideas are raised and consided Ã¢â¬ ¢ These new ideas of literature are discovered by the audienceÃ¢â¬â¢s interpretation of the characters through the influencesRead MoreSimilarities Between Frankenstein And Huckleberry Finn831 Words Ã |Ã 4 PagesTwainÃ¢â¬â¢s Huckleberry Finn. What do they have in common? Apart from the fact all were written by dead, white European males and females, in the 18 and 1900Ã¢â¬â¢s they are all part of the canon. No, not the one that shoots, rather, the literary canon. What is the canon? A literary canon is a body of literature, including books and films that are regarded as reflecting the pivotal points of a particular time and place. They can be used to express knowledge, empathise with others, and can be read and appreciated
Wednesday, May 6, 2020
Sherie Moody ENC 1101 Ã¢â¬âsection #296 October 19, 2015 Reasons Why Testing Products on Animals is Wrong DonÃ¢â¬â¢t we all have rights? Believe it or not animals have rights, just like humans. It is inhumane to tamper with the lives of animals. Animals have no idea whatÃ¢â¬â¢s going on when experimentation is happening. We should nurture and care for the animals, not pick and poke, and inject substances into them. It is not right. No one should want to harm a poor helpless bunny, just see if the mascara is perfect enough for the human eyes. Animal experimentation is a selfish act, humans are only thinking of themselves. Even though some scientist believe animals experimentation is necessary to ensure product safety, scientist shouldnÃ¢â¬â¢t be able to test products on animals, animals are delicate creatures, there are many other ways products can be tested without using animals and animals arenÃ¢â¬â¢t the best test subject. Animals are delicate creatures. Animals have rights. According to Home Office, there was a two percent increase in 2011 for the total number of animal testing procedures. There was then a campaign set out. The campaigning group was called People for the Ethical Treatment of Animals or Peta. PETA did an investigation and a lab in Denver was throwing away live animals into the trash. The animals then died a slow painful death. There were so many welfare violations being made. One scientist was trying to restrain a rabbit and ended up breaking the rabbits back. There were twentyShow MoreRelatedReasons Why Testing Products On Animals1119 Words Ã |Ã 5 Pages14, 2015 Reasons Why Testing Products on Animals is Wrong DonÃ¢â¬â¢t we all have rights? Believe it or not animals have rights, just like humans. It is inhumane to tamper with the lives of animals. Animals have no idea whatÃ¢â¬â¢s going on when experimentation is happening. We should nurture and care for the animals, not pick and poke, and inject substances into them. ItÃ¢â¬â¢s not right. No one should want to harm a poor helpless bunny, just see if the mascara is perfect enough for the human eyes. Animal experimentationRead MoreAnimal Testing Is Wrong1495 Words Ã |Ã 6 PagesHarmful Testing on Animals is Wrong In American society, many groups and organizations are debating whether or not animal testing should be banned. Some people believe that there are reasons why animal testing should be done. Others believe that animal testing is morally wrong. Some experts believe that there are other options available. I believe that animal testing is wrong based on three observations: animal testing is unethical, pointless, and abusive. Numerous years ago, animal testing was startedRead MoreAnimal Testing Should Be Banned847 Words Ã |Ã 4 Pagesagents animals testing. As well as the years has pasted on protesting on animals, it became more sires in increased in the 1960Ã¢â¬â¢s and 1970Ã¢â¬â¢s. Many cosmetics companies been testing on animals throughout the years there is also many that have not. The cosmetics line LUSH has been fighting over animals testing for over thirty years and will continue to fight for their right according to the company. When LUSH had first started the company had divided they didn t ever wanted to test their product on animalRead MoreAnimal Testing Should Be Outlawed Essay1158 Words Ã |Ã 5 Pagesof innocent and helpless, animals are being tortured and murdered. They are used for product testing as well as to put into products without consumer knowledge. These defenseless animals are deprived of respect and are victimized to an extent where it becomes unbearable to watch. There are many organizations that are trying to fight for animal rights. However, these organizations struggle with is because there is no legislation in the United States to combat animal testing. Even though it is not againstRead MoreAnimal Testing : Inhumane And Unmoral1351 Words Ã |Ã 6 Pagesmedicine, and other products on the store shelves? Thousands of animals lose their lives for next to no reason while subject to test in laboratories that give us these products. Animal testing is inhumane and unmoral. It needs to be stopped and the public needs to be educated about what is animal testing and the negative effect it has on animals, educated on animal testing alternatives, and educated on which organizations to support in the world to get rid of animal testing. Animals are test subjectsRead MoreAnimal Testing Is Ethical Or Moral Reason1342 Words Ã |Ã 6 Pages Throughout history, animal testing has always been a controversial and sensitive topic. It can easily receive much hate as well as praise which could be accounted for by many different factors. Animal testing is such a broad idea that can be misconceived in multiple ways such as unethical animal breeding, mutations, or cruel product testing. Yet, that is not the case at all since animal testing could also have a positive and beneficial outcome to which helps people in society. While there are manyRead MoreAnimal Testing Should Not Be Banned1721 Words Ã |Ã 7 Pages Ã¢â¬ Today, more animals are being used in experiments than ever before: around 100 million in the United States aloneÃ¢â¬ (3). Animal testing is now an international issue, and it is becoming a major story. Currently, animals are often used in medical testing, make-up testing, and other consumer product testing. Animals used in such product testing are often abused and suffer from serious side-effects. Animal testing can be painful for the animals, testing results are usually not even useable forRead MoreAnimal Testing Should Be Banned776 Words Ã |Ã 4 PagesAnimal Testing Should be Banned Ã ¨Over 100 million animals are burned, crippled, poisioned and abused in US labs every yearÃ ¨ (Ã ¨11 Facts About Animal TestingÃ ¨). Imagine if that was someones animal getting tortured in labs just to test things such as beauty products and perfume. Animal testing was first suggested when, Ã ¨Charles Darwin evolutionary theory in the mid 1850s also served to suggest that animals could serve as effective models to facilitate biological understanding in humansÃ ¨ (Murnaghan)Read MoreAnimal Testing Should Be Banned Essay537 Words Ã |Ã 3 Pagesmillions of animals are used to test how safe and effective products, such as cosmetics, are. They are genetically modified, force-fed harmful chemicals, blinded, scalded, and maimed. How could one not object to this awful cruelty? Animal testing should be banned because it is cruel, unnecessary, inaccurate, and expensive. The very first reason why animal testing should be banned is elementary: it is cruel and unnecessary. Approximately 17-22 million animals are used for testing each year inRead MoreAnimal Testing Should Be Banned1326 Words Ã |Ã 6 Pagesbelieve animal testing is necessary to ensure medicines and cosmetic products are safe, alternative methods of testing, such as in vitro tests and EpiDerm, are available and should be implemented. Animal testing is the use of animals in research to determine the safety of a product. Animal testing is an outdated science while alternative, non-animal methods are rapidly becoming more effective. Laws in the United States do not require cosmetics or medicinal drugs to be tested on animals, only that
Tuesday, May 5, 2020
Question: Discuss about theQuality Management for Employment Administration. Answer: Introduction: Globalization has a complete collision in the place of work. It has a tendency to build more varied working surroundings for the staff and the association. This has positive as well as negative collision on the staffs productivity. Small business and large business organizations have to accept new guidelines and policies to continue with the varying international atmosphere. Globalization has become additional customary in international organizations. These businesses have to contract with the rising cultural assortment. These modifications make a huge force over the proprietor to accept new policies and guidelines (Luthans and Doh, 2009). The executives have to contract with the increasing diversity at workplace. There is a great difference in religions and work ethics across world. This has improved the intellectual diversity and also shaped multiple remunerations for international businesses. These transforms offer a new approaching into the differences of culture through the mang ers point of view (Czinkota et al 2009). With this transforming era businesses have now a immediate entrance to the international human resources. Outsourcing has distorted the general procedure of employment administration. The world has approved the transformation which has been occurred in the international platform. This directly impacts on the big countries as additional businesses are accepting the outsourcing developments (Daniels, et al 2009). This is making a larger profit margin to the businesses. Diversity of culture at place of work has made a need of more training to employees. The executive has to offer new training and development programs for new as well as old workers. This has shaped great cultural differences among the countries, people and nations. Some staff members have a preference of lesser cultural interface at offices. Effects of Globalization and Total Quality Management Companies which are diversifying their market out of the nation have to understand the countrys culture and must work accordingly to be in that market and nation and grab their market. This would assist in making a direct and huge impact on the businesses, employees and customers (Hill, Cronk, and Wickramasekera, 2013). This has also assisted the employees in making some safe condition. There is an increment in apprehension over the employees safety in bigger companies. Total quality management and the company assist in making sure the direct collisions on the company. Globalization is particularly challenging for an organization and its culture. Total quality management (TQM) makes sure that consumers needs are certain. If an organization has applied TQM tools than it would surely achieves sensation in a long term. Overall excellence could only be made sure if entire tools have been positioned competently. Globalization has shaped an imposing situation and principles for the countries by considering the information technology. The negative collision of the globalization has exaggerated the surroundings. Globalization causing water climate changes, deforestation, and pollution indirectly. Organizations are making a decision to develop their functions and operations. Nations with a less labor price also lean to protect the environment. Organizations are implementing their production unit in different countries where the resources are available in fewer prices (Fuchs, 2007). The business units and productions units are set up by the organizations in colonies which are affecting the environment as well as the health of the individuals. Globalization has both positive and negative impact. It has been seen largely that creating wide scope for current growth and future growth has been created by globalization in an organization (Alexander and Doherty, 2009). It has been largely impacted on the procedure of operations and business functioning. Now days business organization understands the huge scope of actions. It is distressing organization as well as the productivity of organization. Huge sized international organizations are endorsing inter-cultural relationship between the countries, individuals and workers. This overall process is serving in mounting efficient chances for the home country. Globalization has helped entirely in enhancing the opportunities for the diverse organizations. It is obvious from the existing market circumstances that corporation whether big or small is preparing to attain a enormous size. This could only be accomplished through multiple practices. Huge sized organizations are affecting different countries to conquer maximum profit. Meanwhile quality management has become a significant part which needed to be taken care for deriving effective results (Cavusgil, et al 2014). It is the main concern of the businesses and organizations all through the world. TQM is essential for organization to obtain effectual outcome in order to administer the association between workers. Globalization must be constructive sufficient for the reason of achieving the long term output. Hence this is essential in the concern of an organization to uphold process and values to gain growth (Wiersema and Bowen, 2008). The position of each person contributes in the work is essential to be moderated before creating further progression. It is essential to appreciate the function of human being in obtaining outcomes on the basis of long term (Wild, Wild and Han, 2014). Role of Customers Globalization is associated to amalgamating economies to get preferred outcome. Globalization has boosted the consumer awareness level. Clients now days are attentive about the brand and trade name which is used by them. Now days customers are analyzing the local brand with multinational brand and switching to a most quality concerned organization. Due to it many issues are faced by the domestic organizations and small organizations. Now brand value, image and their services are the main elements which are concerned by the customers while buying the products. If customers found some issues in one brand, in no time they switches to another brand (Johnson and Turner, 2010). Role of Employees The workers need to differentiate their part in an active way. Employees have to generate an active role because of high level market. The association is currently looking for skilled, imaginative and advanced workforces to develop high productivity in the organization. The workers need to ascertain the thrilling potentials (Baylis, Smith and Owens, 2013). There is a requirement to transformation the role of manager to manage the product and service quality. The HR executive requests to confirm high quality at workplace. It is apparent for the association to offer high information and assistances to develop high enactment. Management enjoys evidence and events which needed superior consideration in order to accomplish long term defensible outcomes. Role of Organizational Culture A business is a set of many ideas and innovation. It happens in a capricious situation. This straightly touches the efficiency of an employees. The globalization role could be realized in the performance and organizational culture. This is because of technology advancement and international environment. Globalization pretenses a important impact on the performance of a person. The culture of an organization need to be transformed according to companys requirement and customers need. The overall procedure involves design of recipient happenings to progress work quality. The main goal of globalization is to manage high level efficacy. It can be possible only if association accept the host companies culture in no time. The expansion of new opportunities as well as choices would be successful for the administrative development and culture. The growing recognition of globalization has assisted in creating the effective policies for all the concerned parties. Though it is a affinity to mak e self-sufficiency among the corporation in host country. Many functions has been carried with assistance of organizational culture in different nation (Hirst, Thompson and Bromley, 2015). Role of Business Partners Business partners role is very important for a business to prefer an international partner to preserve high level of efficiency. To manage an ample control in the international market partners which plays a foremost part in sustaining high output. A considered corporation is imperative for a group to achieve supreme outcomes. Relationship shows an imperative role in handling operative outcomes. In this method the superiority and quality could be guaranteed in overseas marketplace. Development is only conceivable if the association has been completed in an operative style. Efficiency is only conceivable if a corporation focus on conglomerate (Johnson and Turner, 2010). Conclusion To complete, it is obvious to allusion the part of globalization in current scenario. The worldwide business could only attain important evolution if the correct procedure is accomplished. Globalization has developed as more widespread in worldwide administrations. These corporations have to transaction with the accumulative social assortment. The complete purpose of globalization is to accomplish high effectiveness. Establishments these days are making their focus on originating high efficiency. Every person related to the administrations are the foremost performers. The character of globalization is increasing in the recent occupational situation. In such a state it is suggested to accept actual rule and events for multiple development of the association. References Alexander, N. and Doherty, A.M., 2009.International retailing. Oxford University Press. Baylis, J., Smith, S. and Owens, P., 2013.The globalization of world politics: an introduction to international relations. Oxford University Press. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014.International business. Pearson Australia. Czinkota, M.R., Ronkainen, I., Moffett, M.H., Marinova, S. and Marinov, M., 2009.International business. Wiley. Daniels, J.D., Radebaugh, L.H., Sullivan, D.P. and Salwan, P., 2009.International business. Pearson Education India. Fuchs, D.A., 2007.Business power in global governance. Boulder, CO: Lynne Rienner. Hill, C.W., Cronk, T. and Wickramasekera, R., 2013.Global business today. McGraw-Hill Education (Australia). Hirst, P., Thompson, G. and Bromley, S., 2015.Globalization in question. John Wiley Sons. Johnson, D. and Turner, C., 2010.International Business: Themes and issues in the modern global economy. Routledge. Luthans, F. and Doh, J.P., 2009.International management: Culture, strategy, and behavior. New York, NY: McGraw-Hill Irwin. Wiersema, M.F. and Bowen, H.P., 2008. Corporate diversification: The impact of foreign competition, industry globalization, and product diversification.Strategic Management Journal,29(2), pp.115-132. Wild, J., Wild, K.L. and Han, J.C., 2014.International business. Pearson Education Limited.
Monday, April 13, 2020
A detailed paper about physician assisted suicide (euthanasia). Makes reference to laws, specific cases from Dr. Kevorkian, and much more. This paper argues that euthanasia, otherwise known as assisted suicide, is terribly wrong and immoral. However, there are times, the argument claims, such as when a patient is terminally ill, where the practice could be justified. A close look is taken at Dr. Jack Kevorkians career, with specific attention paid to a number of his patients. The paper criticizes some of the patients deaths, while justifying others. Finally, new individual state laws on the matter are briefly discussed. Taking someones life is murder and is not founded unless the person dies on their own and in their own time. This woman was not going to die from her condition. She was in no physical pain and was not hurting anyone else. She in no way had the right to take her own life through Kevorkian. We will write a custom essay sample on Life or Death or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Life or Death free essay sample Some of my earliest memories are of my grandmother and me. I had always thought about her being here for my high school graduation, my wedding, and every other important milestone I may face. That fantasy was shattered by the news that she had cancer. Growing up, I spent many a weekend at my grandmaÃ¢â¬â¢s house. We made cookies and bread from scratch, something my mom never did. Being the only grandchild that still qualified as an actual child, I lapped up all the attention I got from her. Of course, as an only child I had my parentsÃ¢â¬â¢ attention too, but they also had to discipline me, my grandmotherÃ¢â¬â¢s only concern was loving me unconditionally. By the time I was in high school, my grandma had moved in with my aunt and uncle, not out of necessity but just to make her life easier. I still went to stay with her during school breaks. We will write a custom essay sample on Life or Death or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Even though I could tell she was getting older, and in the back of my mind knew that she wasnÃ¢â¬â¢t going to live for eternity, I always focused on the now. During one of these trips, she was having trouble seeing out of one eye and had made an appointment to see her doctor. While everyone around me kept talking about how it was probably nothing these reassurances had the opposite of the desired effect. I felt more worried and conscious of everything my grandmother did. A few weeks after the visit I came home from working and was told that my parents had some Ã¢â¬ËnewsÃ¢â¬â¢ to tell me. My grandma had been to several doctors appointments since the initial one about her eyesight and while that was no longer an issue, another thing was. They had found a spot on her lung that, as I later found out, was cancer. My parents said we could talk about the news after dinner, but I couldnÃ¢â¬â¢t eat, I was so anxious to hear what was happening. When they told me that she had cancer, I was numb for a long time. Since I didnÃ¢â¬â¢t see her as often as I once did, it was easy to put it out of my mind. As I realized that this wasnÃ¢â¬â¢t something I could run from, I was forced to deal with the harsh realities of life. I didnÃ¢â¬â¢t always deal with the emotions of possibly losing my grandmother in a good way. I let my grades slip even more than they already were and frankly didnÃ¢â¬â¢t even really care anymore. I finally forced myself to get up in the morning and do better in my life. While it seemed that my life was collapsing around me, I knew that I had to stick it out no matter how hard it got. My whole high school career has been a test of my strength and perseverance, but these months in particular proved to be the hardest of my entire life. I am more determined than ever to fulfill my hopes and dreams and not let anything get in the way.
Wednesday, March 11, 2020
To examine the determinants of FDI in China and India and the causes for their difference. The WritePass Journal
To examine the determinants of FDI in China and India and the causes for their difference. Abstract: To examine the determinants of FDI in China and India and the causes for their difference. Abstract:1. Introduction:2. Literature review:2.1. China:2.1.1. National determinants:2.1.2. Regional determinants:2.2. India:3. Theoretical model of FDI determinants:Market size and growth prospects:Natural and human resource endowments:Physical, financial and technological infrastructure:Trade openness and access to international markets:The regulatory, policy framework and policy coherence:4. Data and methodology:4.1. Data:Ã 4.2. Methodology:4.2.1.Determinants of FDI in China and India:4.2.2. The difference in inward FDI between China and India:5. Empirical results:5.1. Individual country models:5.1.1. China:5.1.2. India:5.1.3. China and India:6. Policy implications:Conclusion:Related Abstract: This study aims to examine the determinants of FDI in China and India and the causes for their difference. Ordinary least squares models were first applied to analyse separately FDI determinants in China and India and then a panel data model was developed to explore the causes of the differences. It was found that ChinaÃ¢â¬â¢s FDI was determined by inflation while IndiaÃ¢â¬â¢s FDI was influenced by infrastructure and trade openness. Infrastructure was the main reason why India was lagging behind China. The results suggest that India needs to upgrade its infrastructure and create effective trade policies in order to attract FDI. Key words: FDI, China, India, inflation, trade openness, infrastructure. 1. Introduction: Multinational Enterprises (MNEs), comprising 82,000 parent companies, 810,000 foreign subsidiaries and an excess of inter-firm arrangements worldwide, have played an important and growing role in todayÃ¢â¬â¢s global economy (UNCTAD, 2009). The worldÃ¢â¬â¢s top MNEs are the prominent driver of international production. In 2008, they accounted for around 4% of world GDP and had combined assets of $ 10.7 trillion, combined foreign sales of $ 5.2 trillion and employed 8.9 million people (Table 1-1). Table 1-1:Snapshot of the WorldÃ¢â¬â¢s top 100 TNCs, 2006-07/08 Variable 2006 2007 2006-2007 % change 2008 2007-2008 % change Ã Assets ($billion) Ã Foreign Total 5,245 9,239 6,116 10,702 16.6 15.8 6,094 10,687 -0.4 -0.1 Sales ($billion) Ã Foreign Total 4,078 7,088 4,936 8,078 21.0 14.0 5,208 8,518 5.5 5.5 Employment (thousands) Ã Foreign Total 8,582 15,388 8,440 14,870 -1.66 -3.4 8,898 15,302 5.4 2.9 Source: UNCTAD (2009), p.19, Table I.17 (based on UNCTAD/Erasmus University database). The key measure of MNEsÃ¢â¬â¢ activities is foreign direct investment (FDI), defined as Ã¢â¬Å"an equity investment outside of the parent corporationÃ¢â¬â¢s home country, it implies some control over economic activity, usually a greater than 10% stakeÃ¢â¬ (Baker et al., 1998). In line with the increasing importance of MNEs, global FDI inflows have grown significantly in the last 20 years (UNCTAD, 2010): average annual inflow between 1990-2000 was 492.86 $ billion, which reached a peak of $ 2,099.97 billion in 2007 before declining to $1,114.2 billion in 2009, reflecting the effects of the global crisis. However, FDI inflows are expected to increase further to $1.3 $1.5 trillion in 2011 (Figure 1-1). Figure 1-1: Global FDI inflows and projections, 1990-2011 Source: UNCTAD (2010). FDI inflows have been shifted noticeably to developing and transition economies owing to their economic growth and reforms as well as their progressive liberalisation of foreign investment regimes (UNCTAD, 2010). As a result, developing and transition economies attracted nearly half of global FDI inflows in 2009 (Figure 1-2). Among the largest FDI recipients from these economies, China and India have emerged as the second and third world most popular FDI destinations (UNCTAD, 2010). Figure 1-2: Shares of developing and transition economies in global FDI inflows and outflows, 2000-2009 (%). Source: UNCTADstat, calculated based on data of inward and outward FDI. China opened up its economy to foreign investment in 1979 and since then inward FDI in China has risen appreciably. By 2009, the absolute value of FDI inflows was $95 billion compared to only $0.057 billion in 1980 (UNCTAD, 2010). Over 10 years after China, India too liberalised its economic policies, replacing the existing for more relaxed and open policies towards foreign investment. The reforms have resulted in considerable increased inflows of FDI during the past decade: inflow in 2009 rose to $34.61 billion from only $2-3 billion during the 1990s (UNCTAD, 2010). Even so, the amount of FDI in India is still lagging behind most other emerging economies, especially China. On the global competitiveness scale, China ranked higher than India in all criteria of economic competitiveness (Table 1-2). Table 1-2: The global competitiveness index, 2010-2011 Ã Pillars Ã Basic requirements Institutions Infrastructure Macroeconomic environment Health primary education Country Rank Rank Rank Rank Rank China 30 49 50 4 37 India 81 58 86 73 104 Ã Efficiency enhancers Higher education training Goods market efficiency Labour market efficiency Financial market development Country Rank Rank Rank Rank Rank China 29 60 43 38 57 India 38 85 71 92 17 Ã Innovation sophistication Technological readiness Market size Business sophistication Innovation Country Rank Rank Rank Rank Rank China 31 78 2 41 26 India 42 86 4 44 39 Source: World Economic Forum (2010). The differences in FDI inflows between these two countries suggest an intriguing area for further research. If China, with its Ã¢â¬Å"new-foundÃ¢â¬ belief in capitalism can attract significant amounts of FDI, why India which is endowed with Western-type institutions and capitalist organizations cannot? What causes the gap in volumes of FDI between the two? This paper is going to address these questions by evaluating factors determining FDI based on current literature on FDI in general and FDI in China and India in particular. The study is structured as follows: part 2 reviews the literature on FDI determinants in China and India. Part 3 presents the eclectic theory and empirical studies. Part 4 describes data and methods for analysis. Part 5 analyses FDI determinants in the two countries. Part 6 suggests policy implications and part 7 concludes. 2. Literature review: The emergence of China and India as the two most favoured hosts of FDI among developing economies has generated various numbers of empirical studies on the major determinants of FDI in each country as well as the two countries combined. 2.1. China: Studies on factors shaping FDI in China can be broadly categorized into two groups: studies at the national level and those at regional level. 2.1.1. National determinants: The empirical results from Chen (1996), Henley et al. (1999), Zhang (2001), Dees (1998), Hong and Chen (2001) and Liu et al. (2001) all concluded that market size and preferential policies, along with others, were primary factors for ChinaÃ¢â¬â¢s FDI. Wei (2005) explored the determinants of FDI from OECD to China for the period from 1987 to 2000. The analysis found significant relationship between FDI and market size, real exchange rate and trade openness. Among these determinants, market size, measured by GDP per capita, appeared as the major driving force for outward FDI from OECD countries to China. This seems to be convincing as China has a huge domestic market with a mass-production system, which considerably reduces production costs. This factor coupled with Ã¢â¬Å"FDI friendlyÃ¢â¬ policies creates business opportunities for foreign investment and hence increase the attractiveness of China to multinationals. The analysis provides reasonable explanations for FDI inflows in China, however, it should be taken into account that the source of FDI from OECD countries only account for a small proportion of ChinaÃ¢â¬â¢s inward FDI. Therefore, the results should be assimilated with caution. Mathew et al. (2009) provided evidence that corruption, as an indicator of political risk, determined the location decision of MNEs. In particular, the finding suggested that provinces with effective local governments and better efforts to tackle corruption tended to attract more FDI. The study indicated that if provinces could improve their Ã¢â¬Å"anti-corruption effortsÃ¢â¬ to the average level, they would be able to receive more FDI. For example, FDI would be boosted to more than $ 40 million in the following year as a result of a 10 % increase in the anti-corruption efforts. 2.1.2. Regional determinants: Some studies have investigated the determinants of FDI in China at a regional level. For instance, Xing et al. (2008), focusing on the Eastern Chinese area, found that FDI was positively related to market size and labour quality, whereas, education and infrastructure were statistically insignificant in explaining FDI. Wei et al. (2010) analyzed the location factors and Ã¢â¬Å"network relationsÃ¢â¬ of MNEs in Nanjing, China. This study confirmed the importance of infrastructure and government policy in the location decision of MNEs. Government intervention through investment policies was one of the key factors determining FDI since it indicated the significant role of government in expanding FDI. 2.2. India: The growth of FDI in India over the last decade since its economic reforms has raised the interest for further investigation. However, there are only a nominal number of empirical studies trying to indentify major determinants of FDI in India. One of those studies is that by Pradhan (2010), examining the role of trade liberalisation on FDI inflows in India between 1980 and 2007. The results found that trade openness had a positive correlation with FDI and that this relationship was stronger after the economic reforms since 1991. This implies the necessity of maintaining an Ã¢â¬Å"open doorÃ¢â¬ policy to attract more FDI into the Indian economy. Other factors were also found significant in the study including real exchange rate and terms of trade. In a current study of FDI determinants in India, Resende (2010) found the evidence supporting the positive impacts of technology growth, trade openness and market size on FDI. In particular, market size and market attractiveness appeared to be the most significant factors determining the inflows of FDI into India. Poor infrastructure, on the other hand, deterred MNEs from investing in the country. Green (2005) explored FDI in a specific Indian industry sector: telecommunications from 1993 to 2003. The results showed that FDI would gain more traction if the government could reduce the limits on investment, maintain transparent regulations and improve physical infrastructure in the telecommunication sector. This conclusion seems to be appropriate as the evidence of FDI performance in this sector during the chosen period suggested that foreign firms entering the telecommunication industry did not stay in the business for a long time. The reasons behind this were that FDI had long suffered from inadequate infrastructure, opaque regulatory and legal environment. Among infrequent macro-level studies on FDI in India, Mukim and Nunnenkamp (2010) investigated determining factors of MNEsÃ¢â¬â¢ location decision in 447 districts of India. The analysis indicated that infrastructure and skilled workforce influenced the location choice of MNEs. However, the study suffered from data limitations with regards to FDI determinants at district-level. This may reduce the reliability of its results and hence cannot be applied generally. There seems to be a few studies considering FDI in India such as those by Green (2005), Pradhan (2010) and Resende (2010) investigating FDI determinants in India. However, their studies only focus on a particular industrial sector or factors instead of looking at different industries or various factors. Mukim and Nunnenkamp (2010) attempted to examine the determinants of FDI at a macro-scale level. Nevertheless, their research suffers from data limitations and hence cannot always apply. In comparison, FDI in China is well-documented: there is a range of studies from regional level such as those by Xi et al. (2008) and Wei et al. (2010) to national level including those by Chen (1996), Zhang (2001) and Wei (2005). Furthermore, there are not many studies concerning FDI in China and India to eventually compare and justify the differences in total FDI between two countries. For example, except a study by Sinha (2007) that gives adequate attention to India, other studies such as Wei (2000) and Wei (2005) centre predominantly on China. There is not enough focus on India in terms of FDI determinants. This study will attempt to fill the gap indentified in current knowledge. In particular, two homogeneous models of FDI determinants in China and India will be developed to identify important factors in each country and then a final model for both countries will be included to ultimately compare and explain the gap between China and IndiaÃ¢â¬â¢s FDI inflows. 3. Theoretical model of FDI determinants: The theoretical framework for this study is based on the location advantages of Ã¢â¬Å"ownership, location, internalizationÃ¢â¬ (OLI) paradigm proposed by Dunning (1973). The OLI model demonstrates reasons for firms that successfully operate abroad and their mode of entry (Table 3-1). In the theory, FDI is explained by identifying three main elements which guide the investment decision process of MNEs. They include: ownership (O), location (L) and internalization (I). Ownership advantages refer to the firmsÃ¢â¬â¢ production process which allows it to have a competitive advantage in overseas markets. Location advantages are benefits that a host country can offer a foreign firm. Internalization refers to transaction costs and the ability of multinationals to exploit ownership and location advantages through FDI. While ownership and internalization advantages vary among investing firms, location advantages are specific to the host country. This latter advantage provides a strong grounding for further research on the determinants of FDI. Table 3-1: Relationship between OLI-advantages and mode of entry Ã Advantages Mode of entry Ã Ownership Location Internalization FDI Yes Yes Yes Exports Yes Yes No Licensing Yes No No Source: Perlitz (1997) There is a vast number of studies on the location advantages of FDI such as those by Culem (1988), Estrin et al. (1997), Butler and Joaquin (1998), Wei (2000), Razafimahefa and Hamori (2005), Ang (2007), Sinha (2007) and Pradhan (2008). The organisation for economic co-operation and development (OECD, 2002) summarizes the main FDI determinants as follows: Market size and growth prospects: Countries with large market sizes (measured by GDP per capita) and sustainable economic growth (measured by the growth rates of GDP) offer better opportunities for MNEs to access the market, develop economies of scale and explore profitability. As an example, Ang (2007) confirmed that a large domestic market resulted in more FDI inflows, owing to the benefits of economies of scale. Natural and human resource endowments: These are factors of importance in MNEsÃ¢â¬â¢ location decision process. Export-oriented FDI in particular seeks to take advantage of those factors related to low labour costs and abundant natural resources. Moreover, the quality of human capital in a country is crucial for technology transfer, managerial techniques and spill-over effects of FDI. Sinha (2007) suggested that the recent Ã¢â¬Å"business process outsourcingÃ¢â¬ boom in India occurred thanks to the qualified workforce well-skilled in English and technologically educated in Ã¢â¬Å"IT enabled servicesÃ¢â¬ . Physical, financial and technological infrastructure: Ã Infrastructure comprising transport, electricity, communication networks, education, health facilities and other forms are significant determinants of FDI. MNEs are more likely to be attracted to areas with good infrastructure. For example, Sinha (2007) found the significant impacts of port based infrastructure and its proximity on FDI as it lessens inland transportation and reduce costs. Lack of investment in infrastructure, on the other hand, deters FDI. Trade openness and access to international markets: Trade reforms, the degree of openness to trade (measured by the proportion of exports and imports to GDP) and access to regional and global markets are important factors in determining FDI. In particular, openness makes the transfer of goods and capital in and out of the host country easier in the absence of restrictions and thus stimulates production and reduces costs. In realisation of the importance of trade openness, the World Bank has been requiring developing economies to open up their markets so that free trade can help boost growth in these countries (IMF, 2006). The regulatory, policy framework and policy coherence: Macroeconomic stability (indicated by exchange rate stability and low inflation) and political stability (signified by transparent regulatory, legal framework and business environment) are essential for attracting FDI. For instance, Wei (2000) concluded that if China and India could reduce red tape and corruption to a level comparable to Singapore, FDI inflows would be 218% and 348% higher respectively for these countries. 4. Data and methodology: 4.1. Data: Based on the theoretical model and empirical studies discussed previously, five location indicators were chosen to reflect the factors that are most likely to affect FDI. The explanatory variables comprise of infrastructure, trade openness, political risk, inflation and exchange rate. An overview of these variables and their predicted signs is presented in table 4-1: Table 4-1: Determinants of FDI according to theory and empirical studies Variables Predicted sign Empirical studies Physical, financial and technological infrastructure: Infrastructure (+) (+):Ã Green (2005), Mukim and Nunnenkamp (2010), Wei et al. (2010), Sinha (2007).(-): Ã Ã Pradhan (2008).No effect: Xi et al. (2008) Trade openness and access to international markets: Trade openness (+) (+): Culem (1988), Wei (2005), Pradhan (2010), Resende (2010). The regulatory, policy framework and policy coherence: Political risk (-) (-): Ã Green (2005), Mathew et al. (2008), Butler and Joaquin (1998). Inflation (-) (-): Ã Estrin et al. (1997), Razafimahefa and Hamori (2005). Exchange rate (-) (-): Ã Wei (2005), Pradhan (2010).(+): Resende (2010). A regression analysis was carried out in order to investigate the links and trends of the presented indicators, specific to FDI in China and India. The regression analysis consists of data from 1984 to 2008 for both countries. FDI net inflows per capita in current US dollars are used; this allows us to take into account the relative country size. The data on FDI was drawn from the World Bank database (IMF, 2010). The period choice of this analysis was partly determined by the availability of variablesÃ¢â¬â¢ data and is thus somewhat restricted. For example, investigation prior to1979 for China could not be applied due to the unavailability of several independent variables. This limits the number of observations and makes it difficult to justify the effects of economic reforms on net FDI inflows in China. Therefore, this data limitation potentially leads to the study missing a key turning point in ChinaÃ¢â¬â¢s policy and regulatory regime following its economic reforms in 1979. Ã¢â¬ËHuman resourcesÃ¢â¬â¢ was identified as an important determinant of FDI in the theoretical framework. However, the data for possible indicators of human capital, such as secondary school enrolment and literacy rates, was insufficient. For example, some figures for the years studied were unavailable. As a result, human resources was not included in the regression. Busse and Hefeker (2007) used 12 indicators of political risk which could have been applied to this analysis. However, due to budgetary constraints these were not available. Furthermore, dummy and slope dummies (INDIA=1if India, otherwise China) were used to assess if FDI inflows and the chosen factorsÃ¢â¬â¢ effects on FDI were significantly different between two countries. FDI was specified as a function of the following form: fdi = f ( infra, trade, pol, infla, exc) Where the variables are listed and defined as below: Table 4-2: Determinants of FDI in China and India Variable name Proxy for variable Measures fdi FDI inflows Net inflows of FDI as a percentage of real GDP infra Infrastructure Telephone lines per 100 people trade Trade openness Sum of exports and imports as a percentage of GDP pol Political risk Scale 0-1 (0=unstable, 1= stable) infla Inflation Annual growth rate of the GDP implicit deflator. Exc Exchange rate Official exchange rate (local currency units per US $) Data sources and Summary statistics, time series plots: see appendix table A-1, A-2 and figure A-1, A-2. Ã 4.2. Methodology: 4.2.1.Determinants of FDI in China and India: Having considered all the variables that are used in the analysis, this paper applies time series regression models and the least squares method to examine FDI determinants in China and India. As in other studies (Wei, 2005; Busse and Hefeker, 2006) the log-linear model was adopted to adjust for heteroscedasticity. Furthermore, by taking the log-linear form, any expected non-linear relationship between FDI and the explanatory variables could be transformed into a linear one. Therefore, the estimated equation is: A unit root test was conducted to test whether the independent variables were stationary. The results of the tests are presented in appendix table A-3. It appears that in the case of India, most of the variables were non-stationary with an exception of lnexct. The data for China also resulted in most of the explanatory variables being non-stationary apart from lninfrat. Since the use of non-stationary variables can lead to spurious regression problem, making the analysis wholly unreliable, those variables were made stationary by using finite differences. Hence the new estimated model is: Although taking the differences could remove the unit root, it would reduce the number of observations by one for each variable. This, in turn, may weaken the explanatory power of the models. 4.2.2. The difference in inward FDI between China and India: In order to assess whether there is any difference in FDI inflows between China and India, a joint model of both countries during the period from 1984 to 2008 was conducted in the analysis. This would also assess whether the chosen explanatory factors affected FDI differently between China and India in the same period. Dummy and slope dummies were added to complete the model and panel data method was used. The estimated model is as follows: 5. Empirical results: 5.1. Individual country models: Table 5-1 shows the results obtained for ChinaÃ¢â¬â¢s and IndiaÃ¢â¬â¢s models. For both ChinaÃ¢â¬â¢s and IndiaÃ¢â¬â¢s models, the hypotheses of non-autocorrelation and normality were not rejected at 5 % critical value. Therefore, the parameter estimates could be concluded as being unbiased and consistent. Although, RESET tests suggested that the functional forms were mis-specified, the models were the best results to be found. The original form (1) increased the model fit and did not fail the RESET tests, however, this would lead to spurious regression problem as discussed above. In addition, possible interactions between variables were examined. A statistical interaction occurs when the effect of one explanatory variable depends on another explanatory variable, which makes the simultaneous impacts of these variables on the dependent variable non-additive. This may cause the estimated model to be incorrectly specified. As a result, variable interactions were explored through a two-way effect experiment, however, no sensible interactions between variables were found. Parameter stability was tested using the N-step Chow tests and the hypothesis of parameter stability was not rejected at 1% critical value for both ChinaÃ¢â¬â¢s and IndiaÃ¢â¬â¢s models (test results are displayed in appendix figure A-3). Table 5-1: FDI determinant modelDependent variable: fdi China: Model 1 Colinearity diagnostics (VIF) 2 Colinearity diagnostics (VIF) Constant -0.236 -0.186 Ãâlninfra 1.776 1.118 1.747 1.117 Ãâlntrad 1.084 1.298 Ãâlnpol 0.574 1.174 0.713 1.159 Ãâinfla 0.083 1.450 0.094* 1.207 Ãâlnex -0.911 1.209 -0.918 1.209 N 24 Mean VIF: 1.25 Mean VIF: 1.17 R-squared 0.238 0.229 F 1.125 1.408 RESET 9.2866** 11.174** Autocorrelation 0.96802 1.0143 Normality (Chi^2) 5.4895 5.5462 India: Model 1 Colinearity diagnostics (VIF) 2 Colinearity diagnostics (VIF) Constant 0.185 Ãâlninfra -1.708* 1.345 Ãâlntrad 1.584* 1.104 Ãâlnpol 0.020 1.136 Ãâinfla 0.007 1.211 Ãâlnex 0.433 1.235 N 24 Mean VIF: 1.251 Ã R-squared 0.412 F 2.521* RESET 36.691** Autocorrelation 0.17512 Normality (Chi^2) 0.15490 Note: *** significant at 1% level; ** significant at 5% level, * significant at 10% level.For more details of the test results, see appendix table-A-4, A-5, Figure A-3. The possibility of multi-collinearity was also taken into account since the introduction of closely related variables in the model may cause serious multi-collinearity problem. This could result in an unexpected increase in the standard error of the coefficients and therefore renders the t-statistics unreliable. Multi-collinearity diagnosis was hence conducted and the results were shown in appendix table A-4. Variation inflation factors (VIF) were reported for each specification. In all models, multi-collinearity did not seem to be serious as mean VIFs were not substantially greater than 1. Having evaluated the models, it was generally concluded that the models were satisfactory. The estimated results for individual country are analysed below: 5.1.1. China: Interestingly most of the factors did not have the expected signs except trade openness and exchange rate. However, apart from inflation, the other variables did not prove to be statistically significant. Inflation, in particular, had a significantlypositive impact on FDI inflows in China. The result is somehow surprising given that many empirical analyses such as those shown in table 4-1 have concluded that MNEÃ¢â¬â¢s investment decision is adversely affected by price volatility as it raises the costs of doing business. However, according to Foad (2007), inflation may affect FDI through two ways. The first is that a rise in host countryÃ¢â¬â¢s price level would make local produce more expensive in local export-markets. As a result, export behaviour would be reduced and hence discourages direct foreign investment. The second suggests that inflation in the host country gives MNEs a competitive advantage over domestic firms. In particular, since foreign firms can have access to resources from home parent companies; they are more protected from domestic inflation. Therefore, host country inflation may generate greater volumes of FDI. The second effect appears to be dominant in the case of China as the trends in FDI inflows and inflation over the period 1984-2008 shows that there were a few years, for example the early 90s and late 2000s, when the changes in FDI and inflation moved in the same patterns (Figure 5-1). Figure 5-1: FDI and inflation in China 1984-2008. Source: based on UNCTAD (2010). 5.1.2. India: The explanatory power for IndiaÃ¢â¬â¢s models is fairly higher than that for ChinaÃ¢â¬â¢s (41.2% compared to 23.8% and 22.9% respectively). However, only infrastructure and trade openness were found to be significant. Infrastructure was negatively correlated with FDI inflows in India. This is in line with the study by Pradhan (2008), however, contrasts with other findings by Green (2005) and Mukim and Nunnenkamp (2010). The negative effect of infrastructure is most likely due to sluggish investment in infrastructural facilities in India. Badale (1998) indicates that the regional differences in infrastructure have become an important location determinant for foreign investors. However, despite the efforts of Indian government to upgrade its infrastructural facilities in recent years, more work is still required to reach the levels comparable to other developing countries. State-controlled physical infrastructure has long been considered as the weakest link in the Indian economy (Steel, 2001). This bottleneck in the form of inadequate infrastructure may discourage FDI flows into the country. According to the world economic forum, backwardness of infrastructure is the most concern for foreign investors while conducting business in India (Figure 5-2). In particular, one of the biggest infrastructure problems is electricity supply (Yallapragda, 2010). Since the state power supply is so uncertain that most businesses have started to use their own power generators. These evidences combined with the model result reinforce the suggestion that poor infrastructure could deter potential foreign investment into the Indian economy. Figure 5-2: The most problematic for doing business in India Source: World Economic Forum (2010). The trends of FDI inflows and trade openness in India during 1984 and 2008 seem to suggest a positive association between openness and FDI (figure 5-3). Figure 5-3: FDI and trade openness in India 1984-2008. Source: based on UNCTAD (2010). The results have verified this relationship: trade openness was found significant and had the predicted positive sign. Its positive impact on FDI inflows confirms the success of IndiaÃ¢â¬â¢s policy reforms since 1991. Prior to the reforms, India followed an Ã¢â¬Å"inward-looking import-substitutingÃ¢â¬ regime with Ã¢â¬Å"one of the most complicated and protectionist regime in the worldÃ¢â¬ (IMF, 1998). In particular, the government imposed high import restrictions with quantitative restrictions on 90% of value-added of manufacturing, maximum tariff rate of 400% and significant export controls (Rajan and Sen, 2000). However, following the economic liberalisation in 1991, India has made drastic changes in its trade policy in order to integrate itself with the global economy. IndiaÃ¢â¬â¢s average imported weighted rate declined to 27% in 1999, effective protection rate came down to 72% in 1995, export controls were removed and emphasis was placed on promoting exports (Rajan and Sen, 2000). As a result, trade liberalisation has made the transfer of goods and capital into and out of the country easier with lower restrictions, thus stimulating production and reducing costs. Trade openness is, therefore, seen as a major catalyst for inward FDI in India. 5.1.3. China and India: Table 5-2 shows the results for joint model of FDI determinants in China and India. Overall the models passed the auto-correlation tests; however, the R-squared obtained is not very high: the independent variables explain about over 23 % of the variation in the change in FDI inflows in both models. Table 5-2: FDI determinants in China and India INDIA = 1 if India, otherwise 0 ModelÃ Ã Ã Ã Ã Ã 1 2 Constant -0.236 -0.186 Ãâlninfra 1.776 1.747 Ãâlntrad 1.084 Ãâlnpol 0.574 0.713 Ãâinfla 0.083* 0.094** Ãâlnex -0.911 -0.918 INDIA 0.421 0.486 ÃâlninfraINDIA -3.485 -3.965* ÃâlntradINDIA 0.501 ÃâlnpolINDIA -0.554 -0.446 ÃâinflaINDIA -0.076 -0.094 ÃâlnexINDIA 1.345 1.565 N 48 48 R-squared 0.265 0.235 F 1.179 1.298 Autocorrelation (1) 0.2297 -0.02330 Autocorrelation (2) -1.483 -1.610 Note: *** significant at 1% level, ** significant at 5% level, * significant at 10% level. It is expected that there is a considerable difference between ChinaÃ¢â¬â¢s and IndiaÃ¢â¬â¢s volumes of FDI as illustrated in figure 5-4: generally, FDI inflows in two countries fluctuate over the estimated period. However, ChinaÃ¢â¬â¢s FDI seems to follow a downward trend while the trend for IndiaÃ¢â¬â¢s seems to move upwards. Figure 5-4 a: Changes in FDI inflows in China, 1984-2008 Source: World Bank (2010). Ã Figure 5-4b: Changes in FDI inflows in India, 1984-2008 Source: World Bank (2010). The dummy variable used to estimate these differences between the two countriesÃ¢â¬â¢ FDI, nevertheless, was not statistically significant. Furthermore, the findings show that apart from infrastructure, other factors did not have any significant different effects on FDI inflows in China and India. IndiaÃ¢â¬â¢s poor infrastructure is a deterrent for its attraction towards FDI as compared to China. More precisely, the lack of infrastructure reduced the volumes of FDI received by India to around 3.965% less than China. Infrastructure inadequacy is therefore one of the reasons why India is lagging behind China in attracting potential FDI. China has been ahead of India in developing its infrastructure to desirable levels for foreign investment. This can be demonstrated in the case of Chinese special economic zone (SEZ) model. Following the reforms in 1979, SEZs were created and the first one was based in Shenzhen. It used to be a small fishing village and was successfully transformed into one of the most modern cities in the world with 120,000 MNEs in operation, contributing $40 billion to the total GDP and was recently the worldÃ¢â¬â¢s sixth largest port (Sinha, 2007). India, in comparison, has adopted the Chinese SEZs strategy only over the last decade. However, most of the SEZs are relatively small in size and not reach their full potential. In addition, many Indian ports are undersized, with a high density of traffic and inflicted with poor management (Sinha, 2007). The results also suggest that for both countries, inflation is the determinant of inward FDI but it has unexpected signs. In particular, inflation positively influences FDI. Possible explanations for the positive effect of inflation are the same as discussed in section 5.1.1. 6. Policy implications: Based on the individual country models and the findings from Chinese-Indian joint model, policy suggestions are made to create a more friendly business environment for foreign investment in India. IndiaÃ¢â¬â¢s infrastructural bottlenecks have been proved as a major deterrent of FDI flows. India should therefore take a more balanced focus on developing desirable infrastructure throughout the whole country. In particular, Sinha (2007) suggests that India needs to invest at least $300 billion in infrastructure and it could be funded by foreign exchange reserves and public sector equity off-loading (PSU-offloading). Specifically, India has foreign exchange reserves worth more than $150, together with offloading PSU, which can be funded for upgrading infrastructure. Power and electricity is another concern that Indian authority needs to resolve immediately. Power sector has given a return of 26% on government equity in state electricity boards (SEBs) (Economic survey, 2006). Privatizing power distribution companies and SEBs is necessary to improve the efficiency and tackle the long-term problems in inadequate power supply. Furthermore, India should develop high standard transportation and telecommunication networks to better serve the economy. In the telecommunications sector, for example, the penetration of mobiles and telephones has been widely successful and it should continue to benefit all people in the country. In addition, Indian railway is highly below efficiency which should be privatized like Chinese railway. India should also replicate successful stories in the infrastructural efforts it has made. For instance, expressway networks should be established in all metro cities and link all parts of the country. Another infrastructure concern is the creation of SEZs. Although India has adopted the Chinese SEZ model, it has not been really successful. The size and development of those SEZs do not fully reflect the potential of the Indian economy. It is thus crucial that Indian government should consider developing larger SEZs combined with world-class infrastructure, human resources and good management. This would consequently attract MNEs to invest in these SEZs. Moreover, India should build larger ports equipped with good facilities which would help develop Ã¢â¬Å"state of the artÃ¢â¬ ports that can receive larger ships. Additionally, developing strategic ports in major states could help improve trade and linkage between India and other parts of the world. The second factor determining FDI in India that has been discussed in this study is trade openness. Liberalization of foreign trade policy has brought in substantial benefits for India in terms of trade integration and foreign investment. Trade liberalisation, according to Balasubramanyam and Mahambare (2001), does not means an export promotion strategy being totally favoured. But a neutral regime which neither favour export-oriented industries nor import-substituting industries is appropriate since it provides a comparative advantage to determine the investment distribution between the two groups. Such a neutral regime is likely to attract larger volumes of FDI and promote its efficiency. Creation of export processing zones (EPZs) is another recommended policy to promote exports and attract FDI (Balasubramanyam et al., 1996). Within these EPZs, no restriction on exports of final goods is imposed and duty-free of imports is permitted. It is considered as a small free-trade area and is well provided with infrastructure facilities and telecommunications. In summary, evidence and results from this study have suggested fundamental policies, focusing on infrastructure and trade reforms, to provide congenial investment climate in India for attracting FDI and promote its position comparable to China as a FDI destination. Conclusion: The phenomenon of FDI inflows in developing and transition economies has attracted a significant number of analyses looking into the determinants of FDI in these countries. Based on previous literature and research, this study has attempted to examine important factors shaping FDI in two emerging markets: China and India. India and China are the most favourite FDI destination among developing countries. China was a highly closed economy completely isolating itself from the global economy before 1979. Its closed economic policy almost limited ChinaÃ¢â¬â¢s potential development. Eventually, the Chinese government began to liberalise its economic regime and opened its domestic market to the rest of the world. As a result, remarkable volumes of FDI have been attracted into the country. The same picture has been drawn for India since its reforms in 1991: FDI inflows into India have increased rapidly which places it to the second most popular FDI host after China. However, as compared to its neighbour in the East, India is still far behind in terms of volumes of FDI received. India, despite being the world largest democracy with a huge promising market is still overlooked by foreign investors. The study tried to explore this paradox and to investigate the factors driving FDI in China and India. For these purposes, two separate models were developed to identify the determinants of FDI in each country and then a joint model was conducted to compare and explain the difference in FDI between two countries. The individual model suggested that inflation, though concluded with an unexpected sign (coefficient was found to be positive), had significant impact on ChinaÃ¢â¬â¢s inward FDI. On the other hand, trade openness and infrastructure proved to be major determinants of FDI in India. The model for both countries indicated that among factors examined, inflation was important for FDI inflows in the two countries. Furthermore, the analysis resulted in no significant difference between ChinaÃ¢â¬â¢s and IndiaÃ¢â¬â¢s FDI. Infrastructure appeared to be one of the main reasons why India was falling behind China in attracting FDI. Based on those results, policy recommendations have been made to create a congenial business climate in India for improving its attractiveness towards foreign investors. Firstly, Indian government should take immediate actions to resolve the infrastructure bottleneck. This can be achieved by developing strategic infrastructure, popularizing telecommunication and transportation networks, establishing large SEZs and ensuring efficient power supply. Secondly, India needs to create an appropriate trade policy which balances export promotion and import substitution. In addition, growing EPZs with low trade barriers are desirable for attracting MNEs. This study has provided decent explanation for the determinants of FDI in China and India. It has, to some extent, been able to answer the research question on why India is falling behind China in attracting foreign investment. The research, however, has some limitations which need to be addressed in further study. First of all, it was difficult to obtain sufficient data on FDI determinants for India and China over the last twenty five years and hence the number of chosen factors was restricted. This may explain for the low modelsÃ¢â¬â¢ explanatory power and insignificant F-statistics. Also, industry wise study can be conducted to identify which industry is the main contributor to FDI growth in China and India. Finally, this analysis only compares India with China and does not include other emerging economies such as Brazil and Russia. A study on FDI determinants in BRIC countries thus would complete the comparative picture between India and other emerging countries.
Monday, February 24, 2020
Financial ratio analysis - Assignment Example However, the intention of the ratio computation in this case is for the investment viability and this implies that the relevant explanation of the ratios will be offered. We consider the current ratio, which helps in determining the financial position or ability of an organization to meet its short term obligation. The following formula is used to compute the current ratio A current ratio of 2:1 is considered to be most adequate for numerous organizations in testing the liquidity ratio. In this case, the two organizations are considered to be relatively able to meet their short term obligations. The profit margins indicates that the DOHA Bank is more profitable compared to the Commercial Banks of Qatar. In 2013, the DOHA Bank recorded 0.54 while the CBQ recorded 0.467. On the other hand, in 2012, the DOHA Bank recorded 0.85 while CBQ recorded 0.674 (Chesnick & United States, 2000). This is clear that the DOHA Bank is more viable for investment compared to the Commercial Banks of Qatar. From the debit ratio figures, the two companies seem to be spending nearly the same amount of debts to finance their organizationsÃ¢â¬â¢ growth and development. This has an impact of creating volatile earnings (Chesnick & United States, 2000). However, DOHA Bank appears to be spending a little bit more in its operations and this explains that, it is able to generate more earnings, which are spread to the shareholders in terms of dividends. These ratios help the business to know whether it is meeting its goals of generating profits and satisfying the clients. In this case the total assets turn over will be computed using the following formula. These ratios indicate that the market viability of the two organizations is sound and they can thrive well, since their book value is almost the same as the market values of the shares (Chesnick & United States, 2000). From the above ratio analysis, it can be concluded that the DOHA Banks has more