lForeign Investment in Developing Countries

Also by H.S. KehalAlso by H.S. Kehal

DIGITAL ECONOMY: Impacts, Influences and Challenges ( co-edited withVarinder Pal Singh)

FOREIGN INVESTMENT IN THE PEOPLE’S REPUBLIC OF CHINA AND INDIA:Contrasts and Challenges

Foreign Investment inDeveloping Countries

Edited by

H.S. KehalUniversity of Western Sydney, Australia

Editorial selection and matter © H.S. Kehal 2004Introduction and Chapters 1–12 © Palgrave Macmillan Ltd 2004

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Library of Congress Cataloging-in-Publication DataForeign investment in developing countries / edited by H.S. Kehal.

p. cm.Includes bibliographical references.

1. Investments, Foreign – Developing countries. I. Kehal, Harbhajan, 1942–

HG5993.F597 2004332.67�3�091724—dc22 2004042839

10 9 8 7 6 5 4 3 2 113 12 11 10 09 08 07 06 05 04

ISBN 978-1-349-39883-6 ISBN 978-0-230-55441-2 (eBook)DOI 10.1057/9780230554412

Softcover reprint of the hardcover 1st edition 2004 978-0-333-67080-4

In memory of my parents Chaudhry Harkishan Singh KehalIn memory of my parents Chaudhry Harkishan Singh Kehaland Sardarni Harnam Kaur Kehal

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Contents

LList of Tables ix

LList of Figures xi

LList of Boxes xii

PPreface and Acknowledgements xiii

Notes on the Contributors xvi

LList of Acronyms and Abbreviations xxi

Introduction 1HHarbhajan S. Kehal, Harender H. Samtani and Jagjit S. Sawhney

1 Foreign Direct Investment and its Determinants: A Look to the Past, A View to the Future 13Glauco De Vita and Kevin Lawler

2 The Role of Foreign Direct Investment and its Determinants 33Simran Kahai

3 Inward Foreign Investment and the Chinese Economy 50Michael Thorpe

4 Maximizing Benefits from Foreign Direct Investment andMinimizing its Costs: What Can We Learn from China? 78Kevin Honglin Zhang

5 Foreign Investment in India: Riding the Wave 92Ashima Goyal

6 Foreign Direct Investment, Resource Availability and Efficiency in India 112Veena Keshav Pailwar

7 The European Union’s Foreign Direct Investment intoIndonesia: Determinants and Threats 134Bala Ramasamy and Matthew Yeung

8 Determinants of FDI Flows to Developing Economies:Evidence from Malaysia 154Zubair Hasan

vii

h h f h l f9 What Does the Economic Rise of China Imply for ASEANand India?: Focus on Trade and Investment Flows 171Sadhana Srivastava and Ramkishen S. Rajan

10 Foreign Investment, Foreign Trade and Related Issues: ACase Study for India and China 205P.K. Vasudeva

11 Foreign Direct Investment in the Primary Sector of Mexico 223Dale Colyer

12 The Impact of Culture on Investment in Emerging Markets 238Richard Fletcher

IIndex 259

viii Contents

f blList of Tables

2.1 Inward FDI stock as a percentage of GDP in a selectgroup of fast-growing countries, 1990–2000 37

2.2 Share of foreign affiliates in dollar value of manufacturingof fast-growing economies, 1990–5 38

2.3 Share of inward FDI flows in GFCF, 1990–9 393.1 Global FDI, annual growth rate 1986–2001 513.2 Regional distribution of FDI inflows, 1989–2001 523.3 FDI inflows by source, 1983–2000 563.4 Top ten foreign investors in China, 1999 573.5 Regional distribution of FDI in China, 1983–99 583.6 FDI in China, by sector, 1999 593.7 FDI in China, by type of enterprise, 1979–99 603.8 FIE’s share of China’s total trade, 1985–2001 613.9 Exports of high-technology products from China, value

and share by enterprise, 1996–2000 623.10 Phased tariff reduction on cars, actual rates (per cent),

as at 1 January 2000–6 694.1 Importance of FDI in the Chinese economy, 1992–2002 825.1 Foreign investment in India, 1990–2003 945.2 Capital inflows in India, 1990–2002 955.3 World FDI, 1980–2001 965.4 FDI comparisons for China and India, 1987–97 975.5 Distribution of FDI over industry, 1992–2002 986A2.1 Foreign exchange earnings and expenditure efficiency ratios 1286A2.2 Profitability and efficiency ratios 1286A2.3 Measurement of competitive pressures 1286A3.1 Ratios related to foreign exchange earnings and

expenditure: FDI companies, 1993–2001 1296A3.2 Ratios related to foreign exchange earnings and

expenditure: all companies, 1993–2001 1296A3.3 Percentage weighted average ratios related to foreign exchange

earnings and expenditure: difference in performance 1306A3.4 Ratios related to profitability, efficiency and other

variables: FDI companies, 1993–2001 1306A3.5 Ratios related to profitability, efficiency and other

variables: all companies operating in India, 1993–2001 1306A3.6 Percentage weighted average ratios related to profitability,

efficiency and other variables: difference in performance 1316A3.7 Trends in saving and investment rates, 1990–2001 131

ix

d fl d k7.1 Inward FDI into ASEAN, flows and stock, 1989–2000 1367.2 EU FDI to selected countries/regions, 1992–9 1387.3 Determinants of FDI 1407.4 Panel estimation of the determinants of FDI 1448.1 Determinants of FDI in Malaysia, 1970–2000 1638.2 Mean values of the variables 1638.3A Model summary 1648.3B Coefficients 1658.4 Granger bi-variate F-test for causality 1669.1 Share of ten major products in ASEAN’s exports to

PRC China, 1993–2000 1749.2 Share of ten major products in ASEAN’s imports from

PRC China, 1993–2000 1759.3 Trends in net FDI inflows to ASEAN, 1995–2000 1779.4 Shares in net FDI inflows to ASEAN, 1995–2000 1809.5 Top ten investors in ASEAN, 1995–2000 1839.6 Export revealed comparative advantage (XRCA) estimates of

India and China, manufacturing sector, 1987–98 1909.7 Export pattern of commodities among India and China,

manufacturing sector, 1987–98 1919.8 Export revealed comparative advantage (XRCA) estimates of

India, China and ASEAN, services trade, 1990–2000 1949.9 Comparison of capabilities of Indian and Chinese

software firms 1969A.1 Classification of commodities according to relative

factor intensities 20010.1 FDI data, India: SIA vs. OECD, 1996–2000 20810.2 Relative market sizes of India and China and purchasing

power, 2000 20910.3 Alternative estimates of actual FDI, 1991–2000 21110.4 Share of FDI, 2001 21110.5 Sectoral distribution of FDI approvals, 1991–2000 21210.6 Investment inflows, 1997–2003 21410.7 Foreign investment inflows, 1991–2002 21510.8 Monthly foreign investment inflows, 2002 21610.9 FDI inflows, selected Asian economies, 1996–2001 21711.1 Evolution of Mexican laws, regulations, procedures

and factors affecting FDI 22511.2 FDI in Mexico, by economic sector, 1994–2002 23212.1 Cultural comparison of developed with emerging markets 24312A.1 Results of the Thai survey 256

x List of Tables

fList of Figures

2.1 FDI inflows in developing countries, 1992–2001 353.1 China’s trade and output growth, 1978–2000 513.2 China’s FDI inflows 1993–2001 543.3 Exports by FIEs in China, 1990–9 606.1 Trend in export intensity, 1993–2001 1176.2 Trend in import intensity of exports, 1993–2001 1186.3 Trend in net foreign exchange inflow intensity, 1993–2001 1186.4 Trends in profitability, 1993–2001 1216.5 Trends in overall cost efficiency, 1993–2001 1216.6 Trends in capital cost efficiency, 1993–2001 1226.7 Labour cost efficiency, 1993–2001 1226.8 Trends in skill intensity, 1993–2001 1236.9 Trends in R&D intensity, 1993–2001 1236.10 Trends in advertisement intensity, 1993–2001 1246.11 Trends in selling commission intensity, 1993–2001 1257.1 Indonesia: major sources of FDI, 1996–2000 1377.2 Competitive advantage of selected countries, 1999 1487.3 Competitive advantage of selective countries, 1992–9 1498.1 Malaysia: exponential growth of FDI, 1970–2000 1568.2 FDI (share of sectors), 1990–2000 1578.3 Observed and estimated values of FDI, 1970–98 1658.4 Residuals of the model, 1970–98 1669.1 Trends in bilateral merchandise trade of ASEAN with China,

1984–2001 1739.2 ASEAN-5 investments in China, 1990–2000 1819.3 FDI flows from Japan to Greater China and ASEAN-5,

1993–2001 1839.4 India’s bilateral trade with PRC China, 1985–2001 1849.5 India–ASEAN bilateral trade, 1991–2000 185

11.1 FDI in Mexico, 1970–99 23012.1 Hierarchy of needs between different cultural groups 24012.2 The communication process 248

xi

fList of Boxes

3.1 Host country determinants of FDI 6410.1 Major recommendations of the Steering Committee on

FDI set up by the Planning Commission, August 2001 218

xii

f d k l dPreface and Acknowledgements

It all started about eight years ago. The initial step to producing a book onforeign investment was when Mr T.M. Farmiloe offered me a contract onbehalf of Macmillan to edit a book entitled gForeign Investment in DevelopingCountries. I am most grateful to him for his encouragement and sowing theseeds. The chapters in the volume were assembled from top professionals,academics and practitioners from all over the world in the field of foreigninvestment. Persistence pays, and has its own rewards. Despite variousset backs I was given a fresh go ahead by Ms Amanda Watkins, SeniorCommissioning Editor at Palgrave Macmillan in February 2003. She deserves

yand receives my highest appreciation, encouragement and goodwill. Ms KerryyCoutts, Editorial Assistant, Economics, Business and Management very ably

supported my endeavours throughout 2003. A fresh call for chapters wasissued, and the response from contributors was overwhelming. Contributorsnow come from the USA, Europe, Australia and Asia, from various back-grounds and with first-hand knowledge of the theory and practice of foreigninvestment.

I wish to thank all the contributors: Professor Dale Colyer was one of theoriginal contributors who kept faith in the project, and I am most gratefulto him for showing the virtue of persistence. A special vote of thanks is alsodue to Professor Richard Fletcher for making a valuable contribution withina very tight delivery schedule. The contributors also served as reviewers forother chapters in the book and assisted the Editor in producing a wonder-ful product. The chapters went through a double-blind review process andthe reviewers did a exemplary job. Irrespective of their own congestedschedules, they responded promptly and enthusiastically to all my requests.However, some of them need a special mention as their help set the bench-mark. These include: Professor Alev M. Efendioglu and Professor Vincent F.Yip, University of San Francisco; Professor Yutaka Kurihara, Aichi University,JJapan; Professor Earl Thompson, University of California, Los Angeles, USA;

yDr Mark Wade, University of Tennessee, USA; Dr Andrew Sumner, Universityof East London, UK; Dr S.K. Singh, XLRI, Jamshedpur, India; EmeritusProfessor Akira Ishikawa, Aoyama Gakuin University, Japan; Dr NaokoShinkai, Economist, Development Studies, Japan Bank for International

fCooperation Institute, Tokyo, Japan; and Dr Richard Dawson, University ofWaikato, New Zealand among others.

A special vote of thanks is also due to those who provided us access totheir networks, introducing us to potential authors and contributors and

yencouraging us to persist with the project to its successful completion. Theyare too numerous to mention by name.

xiii

In addition to the contributors and reviewers, the production of a bookIn addition to the contributors and reviewers, the production of a bookneeds immense technical and organizational help. Here a special mentionmust be made of Harender Haresh Samtani for his technical help in the edit-ing process and also for his very valuable computing and linguistic skills. His

kpresence, perseverance and contribution to the development of this bookraised its quality by many notches. His skill in organization of huge amounts

fof information was instrumental in keeping order among the deluge ofmaterials. He was also of great help in the review process by ensuring thatthe schedule was adhered to and following up on various loose ends. Hisconstant presence and persistence strengthened my resolve to see theproject through.

yI also wish to acknowledge the help and technical support provided byVarinder P. Singh and Dr Kiranjit Sohi during the final days of the project.

The journey on this path over the past eight years has been very arduous.Members of my family sustained my enthusiasm. My wife Harbans Kehalcontinued to encourage me to complete the work. My children Harjinder S.Kehal, Parminder Kaur, Harcharan Singh Kehal, my son-in-law Dr KanwaljitSingh and my daughters-in-law Amanda and Paramdeep played a crucialrole in maintaining a cheerful and happy family atmosphere. I am fortunateto be blessed with fine grandchildren Sahil, Simran, Sohan, Pia, Rohin,

wCameron, Tej and Josh, all of them enjoy the fruits of more and more flowof investment funds from surplus to deficit countries and will also share inthe future benefits of foreign investment with members of the world popu-lation living in the developing and developed countries. As a family, we are

gcosmopolitan and world travellers. My ancestral home is in a developingcountry. Over my lifetime, I have witnessed a profound change in the liv-ing standards of my native country. Ceteris paribus, this has happenedbecause of the transfer of production technologies and know-how in agri-culture and other sectors, strengthening of the industrial base and the host

yof other benefits that came with foreign investment. I take this opportunityto express my sincere thanks and gratitude to my family for their moral sup-

fport, love, patience and kindness throughout the long gestation period ofthe project; without their forbearance, understanding and enthusiasm, itwould never have reached fruition.

A collaborative project such as this does not exist in a vacuum and cannotbe kept running without enormous support and help of many kinds. It isappropriate to acknowledge all of those people who have directly or indi-

yrectly shaped this work by contributing to its successful gestation. Manyfriends in Sydney, Australia and other countries have provided inspiration

yand support by reading and commenting on drafts. Mr J.S. Sawhneydeserves special mention and also Professor Tejpal Singh and Dr G.S. Sidhufor providing valuable and constructive comments. Thanks are owed tomany others too numerous to mention by name who spared their valuable

ftime to contribute the project. This book is a culmination of fifty years of

xiv Preface and Acknowledgements

learning, teaching, researching, sharing and imparting knowledge oflearning, teaching, researching, sharing and imparting knowledge ofEconomics and related subjects in developing countries and also inAustralia, Japan and other developed countries. Particular mention must bemade of the enrichment I have received from discussions with colleaguesfrom Japan: Professor Minoru Harada, Kyushu University; Professor SaburoSaito, Fukuoka University; Professor Ken-Ichi Tanaka, President, KitakyushuUniversity; and many others who shared their ideas, insights and technicalknowledge with me during my frequent sojourns in Japan. I also profitedgreatly from interactions with professionals, academics and researchers atprofessional meetings and gatherings, including the Western EconomicAssociation International, Business and Economics Society International,International Food and Agribusiness Management Association, IndianOcean Research Network, Economic Society of Australia, Australian Instituteof International Affairs and many other professional organizations. My stu-

ydents, spread all over the world, always come in handy for sharpening myarguments. Discussions with Dr P. Dass, University of Manitoba, Canada, onvarious aspects of FDI strategy have clarified many issues.

A special environment at the University of Western Sydney, Australia,yfacilitated my work on this project. The cooperative attitude of all my

colleagues there had a direct impact on the successful completion of thisvolume.

Special thanks finally go to the publishing team at Palgrave Macmillan,who through their timely emails prompted me to always meet the deadlinesand keep the project on schedule. I acknowledge their unstinting supportfor the project.

H.S. KEHAL

Preface and Acknowledgements xv

h bNotes on the Contributors

Dale Colyer is Professor Emeritus of Agricultural and Resource Economics,yDivision of Resource Management, Davis College of Agriculture, Forestry

and Consumer Sciences, West Virginia University, Morgantown, WestVirginia, USA. He conducts research and consulting in the USA, LatinAmerica and Africa on agricultural policy, economic development and inter-national trade. Previous publications include books on agricultural policy inEcuador and the international competitiveness of US agricultural com-modities. He received his PhD from the University of Wisconsin in 1963.

Glauco De Vita is Principal Lecturer in International Business and TeachingFellow at Oxford Brookes University (UK). His past experience includes work-ing as senior analyst for an American MNC. A university lecturer since 1997,he has taught international economics, econometrics, industrial economics,international business, international management and strategy at under-graduate and postgraduate level. His research interests include internationaltrade, FDI, capital mobility and models of exchange rate determination. Hehas published in Economics Letters, Applied Economics, The fScottish Journal ofPPolitical Economy and other peer-reviewed academic journals.

Richard Fletcher is principal author of a seminal text of internationalmarketing, International Marketing – An Asia-Pacific Perspective, now in its sec-ond edition. He is currently completing a book on Global e-business mar-keting. His research interests focus on social sensitivity in internationalbusiness and on doing business in emerging markets, including promotionin emerging markets, doing business with such markets via countertrade,the macro impacts of globalization, international ethical practices, environ-mental considerations, corporate citizenship in overseas locations, and sen-sitivity to national sovereignty. He has published in the InternationalBBusiness Review, the gJournal of Global Marketing, Industrial MarketingMManagement and the Australian Marketing Journal. Prior to becoming an aca-demic, he was a Senior Trade Commissioner for the Australian governmentand for over twenty-five years represented Australia’s commercial interestsin Bombay, Bangkok, Jakarta, Los Angeles, New Delhi and San Francisco.

Ashima Goyal is a Professor at the Indira Gandhi Institute of DevelopmentResearch, Mumbai. She has taught courses in Development Theory andPolicy, in Advanced Macroeconomics and Open Economy Macroeconomics,and visited the Economic Growth Center, Yale University, USA in 2000. Herresearch interests are in institutional macroeconomics, the open economy,

kinternational finance, development and gender. She is the author of a book

xvi

l d h lon Developing Economy Macroeconomics, and has won internationalresearch awards. She is also active in the Indian policy debate, and writes amonthly column for the Economic Times.

Zubair Hasan has teaching and research experience spaning over forty-fiveyears. Having worked in a number of educational institutions in India,mainly the University of Delhi, and abroad, he has been working as aProfessor of Economics at the International Islamic University of Malaysiasince 1990. His teaching and research areas include theoretical and appliedeconomics, Islamic economics and finance and environmental economics.He has published extensively in these areas.

Simran Kahai is an Assistant Professor of Economics at John CarrollUniversity in Cleveland OH (USA), and received her Bachelor of Arts inEconomics (1987) from Punjab University, India and a Master of Sciencedegree in Economics (1992) and a PhD degree in Economics (1995), bothfrom Auburn University, Auburn, AL. She previously taught at TuskegeeUniversity at Tuskegee (AL), University of Akron at Akron (OH) and at KentState University (EMBA program) at Kent (OH). Her research has been pub-lished in the Journal of Law and Economics, Transportation Research, the wReviewof Industrial Organization, the Antitrust Bulletin, the cBusiness and EconomicRReview and the Journal of Applied Business Research and she has also con-ducted numerous funded research projects.

Harbhajan S. Kehal fis a Senior Lecturer in Economics at the University ofWestern Sydney, Blacktown Campus, New South Wales, Australia. He com-pleted his PhD at the University of Western Australia, Perth. His researchinterests centre around the digital economy, foreign investment in develop-ing countries and the economic relationships of Australia with Japan andother countries.

Kevin Lawler is Professor of Industrial Organization at the European Schoolof Management (Rome, Italy), where he is Head of Research. He also teachesat Durham University (UK). Until 2002, he was Professor of Economics atSunderland University (UK), and has worked as consultant with a numberof large organizations. His current research interests include internationaltrade and investment, the EU enlargement process and developments in e-commerce. He has written over a hundred articles, and published five booksin the fields of international economics, industrial economics and appliedeconometrics.

Veena Keshav Pailwar received her PhD (University of Poona); MPhily(Cambridge University, UK) and MA (University of Poona), and is presently

working in XLRI, Jamshedpur, as an Assistant Professor of Economics. Shehas previously worked in India with NIPFP, NCAER and NIFM in variouscapacities on various research and teaching projects. Her areas of interest

Notes on the Contributors xvii

are computable general equilibrium (CGE) modelling, financial sectorare computable general equilibrium (CGE) modelling, financial sectormodelling, the impact of financial, fiscal and external sector reforms,foreign capital and its export intensity and commercial banking.

Ramkishen S. Rajan is a Senior Lecturer at the School of Economics,University of Adelaide. He is concurrently a Visiting Fellow at the Instituteof Policy Studies, Singapore. Dr Rajan has been in Adelaide Since 1999; sinceJJuly 2003, he has been a Visiting Senior Lecturer and Freeman Asian StudiesScholar at the Department of Economics, Claremont McKenna College(CMC), California. He has published extensively on various aspects of inter-national economics, especially with reference to Asia and received hisBSocSci. (Hons) in Economics from the National University of Singapore, aMA in Economics from the University of Michigan, Ann Arbor and a MAand PhD from Claremont Mckenna College.

Bala Ramasamy is Associate Professor of International Business andEconomics at the Nottingham University Business School, MalaysiaCampus. He is also the Director of the Centre for Europe Asia BusinessResearch (CEABuR). His research interests are in FDI, international trade,Asian economies, corporate social responsibility and tourism economics. Hehas published widely in the Journal of Applied Economics, the cAsia PacificJJournal of Economics and Business, the ASEAN Economics Bulletin and theBBulletin of Indonesian Economic Studies.

Sadhana Srivastava is currently a Research Scholar pursuing her PhD in theSouth Asian Studies Programme at the National University of Singapore. Sheobtained her MPhil in Economics from Jawaharlal Nehru University ( JNU)in 2000. Her current research interests include FDI and trade-related issuesin the context of India and other Southeast Asian economies. Her recentpublications include a chapter on the emerging economic opportunitiesbetween ASEAN and India (co-authored with Professor Mukul Asher andRahul Sen) in Frederic Grare and Amitabh Mattoo (eds) Beyond the Rhetoric:The Economics of India’s Look-East Policy (New Delhi, 2003).

Harender H. Samtani has masters’ degrees in the fields of management,finance and accounting. His research interests lie in the fields of interna-tional finance and trade. His rich and varied professional experience hasderived from various roles in a multinational bank before taking up aresearch position, and is currently focusing his research towards businessdevelopments in India. He has been actively involved in the editing of thisbook and played a key role in its development.

JJagjit S. Sawhney yretired from the Indian Economic Service after a highlyysuccessful career. He was an Additional Economic Adviser to the Ministry

of Commerce, Government of India and has held many other responsible

xviii Notes on the Contributors

positions in the Indian public service. He actively joined with the Editor ofpositions in the Indian public service. He actively joined with the Editor ofthis book in reviewing the contributions.

Michael Thorpe has interests in international trade, investment andfinance, especially in East Asian and Indian Ocean regions. His work hasbeen published in Economic Record, Applied Economics Letters, the AustralianQuarterly, the Asia Pacific Journal of Economics and Business, the GlobalBBusiness and Economics Review, the Asian Journal of Public Administration andthe Australian Journal of Irish Studies g. He has undertaken research, teaching

gand consultancy in China (AusAid projects), Singapore, Vietnam, HongKong, the USA, the UK, South Africa (USAID economic development pro-jects), Mongolia and Malaysia (as a United Nations consultant). He has beenVisiting Fellow at the Institute of Southeast Asian Studies, Singapore (1991);Loughborough University of Technology UK (1993); the University of Natal,South Africa (1995); University College Dublin, Ireland (1997) and theUniversity of International Business and Economics in Beijing (2001). Heassumed the position of President of the Economic Society of Australia (WA)in mid-2002. He was formerly a Senior Research Fellow with the Institute forResearch into International Competitiveness (IRIC) at Curtin in 1994 and1995; and is at present the Director of the Curtin Business School’sInternational Business Unit. He is also chair of the University’s ChinaReference Group. He currently sits on several editorial boards and is thebook review editor for the Australia Pacific Journal of Economics and Business.

P.K. Vasudeva yis a retired colonel of the Indian Army and is presentlyDirector Principal, College of Communication and Management, BharatiyaVidya Bhavan, Chandigarh. He is also Visiting Professor on InternationalTrade, Panjab University, Chandigarh, Immediate Past President of theChandigarh Management Association and Senior Research Fellow of theStrategic Research Centre, Chandigarh. He has authored four books on theWTO and international marketing, 123 research papers and more than 500articles in national and international journals and Newspapers.

Matthew Yeung freceived his PhD in Marketing from the University ofNottingham, UK. He is currently Lecturer at the School of Business and

wAdministration, Open University of Hong Kong. He is also a Research Fellowat the Centre for Europe Asia Business Research, University of Nottingham,Malaysia Campus. His research interests are in FDI, tourism economics andinternational marketing. He has published in journals such as the AsiaPPacific Journal of Economics and Business and the tAsia Pacific ManagementRReview.

Kevin Honglin Zhang yreceived his PhD in Economics from the Universityof Colorado, and was a post-doctoral fellow at Harvard University and a con-sultant of Harvard Institute of International Development for a year, before

Notes on the Contributors xix

ll h f ld ljoining Illinois State University. His research field is international econom-ics, focusing on FDI, trade and development. He has co-edited four booksand published over thirty articles in leading journals such as fthe Journal ofDevelopment Economics, Economic Development and Cultural Change, theDevelopment Economics, Economic Development and Cultural Change, theJournal of Development Studies, Economia Internazionale/InternationalJournal of Development Studies, Economia Internazionale/InternationalEEconomics, and Urban Studies. In 2000–1 and 2002–3, he was vice presidentof the Chinese Economists Society (CES), a US-based worldwide academicorganization of economists for the Chinese economy.

xx Notes on the Contributors

f dList of Acronyms andAbbreviations

ACFTA ASEAN–China Free Trade AreaADB Asian Development BankADR American Depository ReceiptAFTA Asian Free Trade AreaAIA ASEAN Investment AgreementASEAN Association of South East Asian NationsB2B Business-to-businessBKPM Investment Coordinating Board (Indonesia)BOP Balance of paymentsBPO Business process outsourcingCEC Comprehensive Economic Cooperation (ASEAN–India)CECA Comprehensive Economic Cooperation Agreement

(India–Singapore)CEE Central and Eastern EuropeanCII Confederation of Indian IndustryCPE Centrally planned economyEAI Enterprise for ASEAN InitiativeEC European CommunityETDZ Economic and/or technology development zoneEU European UnionFDI Foreign direct investmentFDICI Foreign direct Investment Confidence IndexFED Foreign exchange expenditureFEE Foreign exchange earningsFEMA Foreign Exchange Management ActFI Foreign investmentFIB Foreign Investment BoardFIE Foreign invested enterpriseFII Foreign institutional investorFIIA Foreign Investment Implementation Authority (India)FIPB Foreign Investment Promotion Board (India)FPI Foreign portfolio investmentFSU Former Soviet UnionFTA Free trade areaFTZ Free trade zoneGATS General Agreement on Trade in ServicesGATT General Agreement on Tariffs and Trade

xxi

d dGDP Gross domestic productGDR Global Depository ReceiptGFCF Gross fixed capital formationGNP Gross national productHRD Human resource developmentHS Harmonized system (tariff classification)ICOR Incremental capital–output ratioICT Information and communications technologyICTs Information and communication technologiesIFI International financial institutionIMF International Monetary FundIP Intellectual propertyIPR Intellectual property rightITC Information and communications technologyITES Information technology enabled servicesJJACIK Japan, ASEAN, China, India, Korea (regional integration)JJSQ Joint Study Group (India–Singapore)JJV Joint ventureLDC Least developed countryM&A Merger and acquisitionMERCOSEN Mexico–Central America FTAMFA Multifibre ArrangementMFN Most favoured nationMNC Multinational corporationMNE Multinational enterpriseMTI Ministry of Trade and IndustryNAFTA North American Free Trade AreaNFEE Net foreign exchange earningsNIC Newly industrialized countryNRI Non-resident IndianNRNR Non-resident (non-repatriable) (rupee)NTB Non-tariff barrierNTZ New and high-technology development zoneODI Overseas direct investmentOECD Organisation for Economic Co-operation and DevelopmentOFED FED other than importsOFEE FEE other than exportsOLI Ownership, location and internalizationPAC Pre-Accession CountriesPCA Principal Component AnalysisPPP Purchasing power parityPRC People’s Republic of ChinaPROCAMPO Mexican agricultural programmeQR Quantitative restriction

xxii List of Acronyms and Abbreviations

h d d lR&D Research and developmentRBI Reserve Bank of IndiaRCA Revealed comparative advantageRTA Regional trade agreementSCP Structure–Conduct–Performance (paradigm)SDO Standards development organizationSECOFI Secretaria de Comercio y Fomento Industrial (Mexico)SETC State Economic and Trade CommissionSEZ Special economic zoneSIA Secretariat for Industrial AssistanceSME Small and medium-sized enterpriseSOE State-owned enterpriseTRIMs Trade-Related Investment Measures AgreementTRIPs Trade-Related Intellectual Property Rights AgreementUNCTAD United Nations Conference on Trade and DevelopmentUNCTC United Nations Centre on Transnational CorporationsWDI World Development IndicatorsWTO World Trade OrganizationY2K Year 2000

List of Acronyms and Abbreviations xxiii