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Industrialization, Liberalization and Two Way Flows of Foreign Direct Investment: The Case of India


  • Kumar, Nagesh

    (United Nations University, Institute for New Technologies)


This paper analyses the evolution of India's FDI position during the post-independence period in comparison with government policy and levels of industrialization and development. Since independence, India has pursued a strategy of industrialization with active governmental intervention. Domestic enterprises accumulated considerable capability in the process of industrialization, which has influenced not only the pattern of inward FDI, but has also led to Indian investments abroad. Changes in government policy have also had an important bearing on India's FDI position. The Indian government's attitude towards foreign investments has evolved over the post-independence period in four distinct phases: gradual liberalization from the establishment of independence till the late 1960s; a more selective attitude from the late 1960s throughout the 1970s; a certain liberalization of policy in the 1980s; and further liberalization of the policy regime with respect to both inward and outward FDI as a part of the structural adjustment program since 1991. The analytical frameworks provided by Dunning and Ozawa that posit the pattern of a country's FDI, delineating both inward and outward changes with the structural transformation of the economy, are kept in the background of the discussion.

Suggested Citation

  • Kumar, Nagesh, 1995. "Industrialization, Liberalization and Two Way Flows of Foreign Direct Investment: The Case of India," UNU-INTECH Discussion Paper Series 1995-04, United Nations University - INTECH.
  • Handle: RePEc:unm:unuint:199504

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    References listed on IDEAS

    1. Desai, Ashok V., 1984. "India's technological capability: An analysis of its achievements and limits," Research Policy, Elsevier, vol. 13(5), pages 303-310, October.
    2. Bhagwati, Jagdish, 1993. "India in Transition: Freeing the Economy," OUP Catalogue, Oxford University Press, number 9780198288473.
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    Cited by:

    1. Dr. Shyam Kumar Ghai, 2015. "Change in Scenario of Foreign Investment in India (From 20th to 21st Century)," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 10(1), pages 102-113, April.
    2. Arben Sahiti & Muhamet Aliu & Arbana Sahiti, 2017. "Review on Policy Developments of FDI in India," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(1), pages 187-196, February.
    3. Brent Davis, 2000. "India and the East Asia Miracle," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 7(1), pages 63-76.
    4. Kumar, Nagesh, 1995. "Changing Character of Foreign Direct Investment from Developing Countries: Case Studies from Asia," UNU-INTECH Discussion Paper Series 1995-16, United Nations University - INTECH.
    5. Nakul Parameswar & Sanjay Dhir & Sushil, 2020. "Interpretive Ranking of Choice of Interaction of Parent Firms Post-International Joint Venture Termination using TISM-IRP," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(1), pages 1-16, March.


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