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Essay / Research Paper Abstract
This 5 page paper looks at India and China as a potential destination for a direct foreign investment; it assesses the risks such as politic and exchange rate risk before making a recommendation. The bibliography cites 5 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEfinchindia.rtf
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Unformatted sample text from the term paper:
operate, including the political and exchange rate risks., The paper will star by looking at the political background and the trade structures as well as the patterns of foreign direct
investment in each country and then consider the more specific elements of the exchange rate risks and potential savings. The assessment of
risk looks at part as well as projected perfomance and trade patterns. If we look at India prior to 1991 the economy was run in a very protectionist manner. The
International Monetary Fund (IMF) described the management of the economy as "one of the most complicated and protectionist regimes in the world" (Rajan and Sen, 2002). In general terms there
was a realisation that direct foreign investment would not only result in economic growth, but that it could also benefit from a transfer of knowledge for longer term economic growth
(Rajan and Sen, 2002). To achieve this the legislative basis had to be change, the rules preventing majority foreign interests in all businesses was changed and trade tariffs were simplified
and significantly reduced (Rajan and Sen, 2002). In 1991 the average simple trade tariff was 128% this had reduced to 34% by the end of 2000. The same
can be said of the trade weighted tariffs which reduced from a 1991 level of 87% average to a 2000 level of 30% (Rajan and Sen, 2002). In 1997 the
maximum trade tariff reduced to 45%, at the 1991 this had been 355% (Rajan and Sen, 2002). The changes were one of the measures in the liberalisation of trade
in India. This liberalisation process can be divided into two phases, the first stage during the early 1990s sees an process that starts privatisation and the courting of direct foreign
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