http://www.dailypioneer.com/home/online-channel/360-todays-newspaper/
97727-fdi-will-kill-indian-retail-small-industry.html
97727-fdi-will-kill-indian-retail-small-industry.html
India is a mixed economy with some socialist elements (along with a capitalist structure). Recently the
country allowed foreign direct investment in the retail sector. The retail sector, like agriculture has been
restricted to domestic producers. The article shows the criticism received by this decision from all political
quarters. The arguments include the fact that the domestic retail sector and small businesses are not
equipped to compete with international giants such as Walmart. This would also affect the employment
situation of the Indian Economy.
The article serves as a great example of the apprehensions of developing nations for barrier-free
global trade. This makes sense from the domestic employment situation though it is highly inefficient.
Also, one can see the difficulty involved in transformation of a socialist institute to a capitalist institute.
1 comment:
The article mentions that 51% of the Indian population is self-employed and that the flow of FDI into the retail market will greatly reduce these jobs. It could, the author explains, have a result similar to that of Thailand, where 38% of the consumer market consolidated into three large manufacturers. I can see how this would happen, as domestic, small business prices fail to compete with the prices of large foreign companies- especially the high-producing Chinese companies. FDI also makes countries much more vulnerable to outside shocks, as investment can be unstable the more it is connected to outside economies. Some countries have shown that growth tends to be more long-lasting and stable when investment comes from national sources.
On the other hand, FDI can also lead to greatly increased economic growth for India. It could introduce firms that actually great jobs and develop lacking sectors.
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