Foreign Capital and Aid Dr. ​Swati Singh Trade

Transcript:Foreign Capital and Aid Dr. ​Swati Singh Trade:
Foreign Capital and Aid Dr. ​Swati Singh Trade Consultant Centre For Regional Trade Indian Institute of Foreign Trade ​Ministry of Commerce and Industry, Government of India #swatisingh23612@gmail.com Topics to be covered What is Foreign Capital and Aid? Components of Foreign Capital and Aid Importance of Foreign Capital and Aid India’s Foreign Capital and Aid status Issues in Foreign Capital and Aid – overall and India specific issues. What is Foreign Capital and Aid? Foreign capital refers to the capital flows from resident entity of one country to the resident entity of another country. The resident entity may be an individual, corporate firm or a Government. Foreign Capital takes the form of FDI, FPI and other foreign capitals. Foreign Aid is also known as Official Development Assistance (ODA). It is a government aid that promotes and specifically targets the economic development and welfare of developing countries. Loans and credits for military purposes are excluded. Aid may be provided bilaterally, from donor to recipient, or channeled through a multilateral development agency such as the United Nations or the World Bank. Capital Account Components Foreign Investment Foreign Direct Investment Foreign Portfolio Investment External Assistance Commercial Borrowings Non-Resident Indian deposits Global Trend of FDI Global flows of foreign direct investment (FDI) fell by 16% in 2017 to an estimated $1.52 trillion, down from a revised $1.81 trillion in 2016, according to the latest UNCTAD Global Investment Trends Monitor. A slump in FDI flows to developed countries (-27%) was the principal factor behind the global decline. A strong decrease in flows was reported in Europe (-27%) as well as in North America (-33%), mainly due to a return to prior levels of inflows in the United Kingdom and the United States after spikes in 2016. FDI to developing economies remained stable, at an estimated $653 billion, 2% more than the previous year. Japanese MNEs became the largest investors in the world, despite a decline in outward FDI of 11 per cent to $143 billion. Their investment in Asia increased by 31 per cent to $49 billion, mainly in China, India and the Republic of Korea. In India, CPC (Taiwan Province of China) announced its plan to invest $6.6 billion in a petrochemical project in Paradip. Four MNEs from developing countries entered the list: three Chinese State-owned MNEs (SO-MNEs), Chem China, State Grid and China Min-Metals, and Tata Motors from India. Developing and transition economies capture