Competition to Catch the Capital Flight

Abstract

The study examines the nature and trends of Foreign Direct Investment (FDI hereafter) flows in India and China since their economic reforms, especially after the sub-prime crisis 2008. A comparative perspective is outlined to delineate the structure, conduct and performance of FDI regimes. We conduct an empirical estimation using Granger Causality test to examine the relationship between FDI inflows and economic growth and find that economic growth to be imperative for FDI inflow. The paper also tries to address vital issues in the management of FDI in the new era of globalization in India and China.