CBSE Class 11 Economics OTBA English

CBSE Class 11 Economics - OTBA English. There are many more useful educational material which the students can download in pdf format and use them for studies. Study material like concept maps, important and sure shot question banks, quick to learn flash cards, flow charts, mind maps, teacher notes, important formulas, past examinations question bank, important concepts taught by teachers. Students can download these useful educational material free and use them to get better marks in examinations.  Also refer to other worksheets for the same chapter and other subjects too. Use them for better understanding of the subjects.

OPEN TEXT BASED ASSESSMENT 

 Role of FDI in Economic Development

Learning Objectives

Students will be able to:

* Evaluate the role of FDI in the economic growth of a country.

* Understand the role of FDI in China’s Growth.

* Understand the extent of FDI in China and India.

* Compare the role of FDI in different states in India with special emphasis to Make in India.

Note to Readers

The text should be thoroughly read, discussed and analyzed by the readers. The readers may get together for brain-storming session discussing:

* Role of FDI in economic development

* Its impact on developed as well as developing economy

* Role of FDI in India

* Sector wise development with special mention of top 10 destinations of FDI

OPEN TEXT BASED ASSESSMENT 

Role of FDI in Economic Development

Abstract

Foreign Direct Investment (FDI) is an investment received by a company or an entity based in one country, from a company or an entity based in another country. It plays a major role in the economic development of an under developed economy. Over the past century, FDI has served the economies of many countries as a launching pad from where they can soar to greater economic heights. This text will help the students to understand the role played by FDI on development of an economy with special emphasis on China and India. Foreign direct investment has a major role to play in the economic development of the host country. Over the years, foreign direct vestment has helped the economies of the host countries to make further improvements in their economic status. This trend has manifested itself in the last 25 years. Any form of foreign investment brings capital, knowledge and technological resources in the economy. It has been observed that the economically developing as well as  nderdeveloped countries are dependent on the economically developed countries for financial assistance that would help them to achieve economic stability. The economically developed countries on their part can help these countries financially by investing in these countries. It can also help the underdeveloped country to build its own research and  evelopment bases that can contribute to the technological development of the country. This is helpful as most of these countries are not able to perform these functions on their own especially in the context of the manufacturing and services sector of the particular country, they are able to enhance their productivity and ultimately advance from economic point of view. At times, it could be provided in the form of technology which is an indirect way of acquiring FDI.

FDI in China

Encouragement to FDI has been an integral part of the planned economic reform process of China. Under Deng Xiaoping’s rule in 1970’s, China partially opened its territory for foreign investors. It has gradually opened up its economy for foreign businesses and has attracted large amount of direct foreign investment. China’s policies toward FDI have experienced roughly three stages:

a) Initial Phase (July 1979 onwards) gradual and limited opening,

b) Continuous Development Phase (1986-91) giving preferential treatment

c) High Growth Period (1992 onwards) promoting FDI with specific objectives

Government policies helped in setting Special Economic Zones (SEZs) to encourage FDI inflow, especially in export-oriented sectors by using relaxed policies. Foreign investors were provided the preferential tax treatment, the freedom to import inputs such as materials and equipment, and simpler licensing procedures. Additional tax benefits were also offered. FDI was encouraged in agriculture, energy, transportation and telecommunication. Foreign investors now had confidence in investing in China due to the reforms within the nation and the entry to WTO in early 2002. Attracted by the country’s investment opportunities and by sheer size and growing domestic market, China is the second largest economy of the world just behind USA. FDI performance of China in attracting large amount of FDI could be attributed to its policy of SEZs particularly exports catering to the international market, focus on infrastructure and comparative advantage owing to the low labor costs. When comparisons are made between the emerging economies, it is observed that policies are common but China stands out with its relaxation for agriculture sector as well

India’s Experience

Till 1991, India had followed a cautious approach regarding FDI policy due to ‘import-substitution strategy’ and ‘self reliance’. FDI through foreign collaboration was welcomed in the areas of high technology and high priority Public sector only. Government established Special Economic Zones (SEZs), designed selective liberal policy and provided incentives for promoting FDI in these zones with a view to promote exports. As India continued to be highly protective, these measures did not add substantially to export competitiveness. Since 24th July 1991, there has been a sea change in India’s approach to foreign investment when it began structural economic reforms encompassing almost all the sectors of the economy.

In 1991, there was a need for economic reforms because of the following reasons:

* India’s Fiscal Deficit was 8.4 percent of GDP. The economy was caught in debt trap. IMF finally agreed to advance the loan but insisted that the Indian Government should introduce economic reforms

* Foreign debts rose to 23 percent of Gross Domestic Product.

Please click the link below to download CBSE Class 11 Economics - OTBA English.