The Business Environment essay

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Having explored to the various factors, affecting the FDI in a country, it is, therefore, essential to shift the attention to the real, evident economic patterns in terms of the comparisons among the countries. The World Economic Forum provides data, comparing the level of investments in the 2000 on the Asian countries. The results reveal that the there is growth in the amount of investment in terms of the FDI (Lardy, 1994).

Table 1: The Comparative Inward FDI into the Asian countries in US billions.

 

2003

2004

2005

2006

2007

2008

2009

2010

India

0.7

0.8

0.8

1.9

1.7

1.8

2.0

2.1

China

2.9

2.8

3.4

2.8

2.9

2.1

1.8

1.6

Pakistan

0.6

1.1

2.0

3.4

2.7

2.2

2.1

2.1

Vietnam

3.7

3.5

3.7

6.5

8.7

8.1

7.6

7.4

FDI (percent of gross fixed investment)

 

2003

2004

2005

2006

2007

2008

2009

2010

India

2.9

3.2

2.9

6.4

5.2

5.5

5.9

6

China

7.3

7

8.4

6.9

7

5

5

3.8

Pakistan

4.2

7.6

11.5

16.7

12.7

10.2

10.2

9.5

Vietnam

11

10.7

11.2

20.4

26.7

24.8

223.1

22.3

FDI per head (US $)

 

2003

2004

2005

2006

2007

2008

2009

2010

India

4

5

6

16

16

16

18

19

China

37

43

61

60

60

64

65

68

Pakistan

4

7

14

27

18

16

17

18

Vietnam

18

20

24

49

52

70

80

85

Source: EIU (2007)

From the above results, it is evident that China is topping in the amount of per head investment. This can be taken to be the favorable conditions, available for the investors, just as the ones mentioned above. The results vary due to political backgrounds, environmental conditions, technology and the market among countries. Some countries like India receive limited FDI because of the excess regulations by its government. The bureaucracy, required in signing business deals in order to invest, can push off the investor; hence, China benefits a lot from these advantages than any other state (Lemoyne, 2000). Vietnam is considerably higher in the GDP costs on the FDI. The IMF report, of 2008 shows statistics on the effects of taxations, pollution and employment to the FDI. Most of the industries in Vietnam are considered to be the most pollutants to the environment. There are conflicting results on the effects of it on the FDI since from the expectation; one would predict that less FDI will be attracted which is the opposite.  High polluting industries have more tax levies imposed on them; thus, these funds directly go to the government investments, hence causing the GDP to grow tremendously. Availability of many industries also causes more employment chances for the people, thus attracting more FDI investment to the country (Lewis, 2005).  Statistics show that India attracts high levels of FDI in terms of technology, according to the UNCTAD report (2009) after overtaking the US in 2005. This is because there is a strong need for people to be advanced in technology and most of the business activities are becoming digital. It is, at the same time, considered the least in attracting the investors towards the manufacturing sector. This is because of the poor infrastructure in the country.  This, thus, justifies the need for the country to be well equipped and have strong and reliable infrastructure in order to attract more foreign investors. This applies to the airports and sea ports, as well, (UNCTAD 2002). According to the 2008 World Bank report, India turned out to be the best country for doing business activities, especially banking. India ranked 120 out of 178 economies. This got based on the reports, conducted annually, showing that the regulations that enhance business activities are higher than those constraining it. There are more rules and regulations, when operating business in the Indian markets; hence, maximum security gets guaranteed for the business dealers. This is surely a deal zone for any businessman since security is a necessity in any business. The World Bank provides ten indicators that make it essential to run business in India as indicated in the following data (Oman, 2000).

 

 

Rank

 

Ease of doing business

120

1

Starting a business

111

2

Dealing with licenses

134

3

Employing workers

85

4

Registering property

112

5

Getting credit

36

6

Protecting investors

33

7

Paying taxes

165

8

Trading across borders

79

9

Enforcing contracts

177

10

Closing business

137

Table 2: Doing business in India

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