Global Journal of Commerce & Management Perspective
Open Access

Abstract

Role of Foreign Direct Investment in Labour Intensive Industries: A Comparison Between India and China

S M Imamul Haque and Ishfaq Ahmad Thaku

Foreign Direct Investment (FDI) has been regarded as important vehicle for economic growth of emerging economies, as FDI brings bundle of benefits to the host economy, which otherwise are not easily possible for these economies. As most of the studies asserts that emerging economies can be more benefited by FDI due to their abundant cheap resources and low labour cost, as they have comparative advantage in their labour intensive industries. India and China are two emerging economies which opened their economies only after long time china opened in 1978 and India in 1991. In this paper descriptive analysis has been made regarding FDI inflows between Indian and Chinese labour intensive industries and their contribution to these economies. Paper concludes that China is more successful regarding attracting and utilizing of FDI than India. As the wages of China and other Asian countries are rising India has opportunity to become world factory of labour intensive industries, India needs to have clear policy regarding attracting FDI.