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  • Cited by 2
  • Print publication year: 2010
  • Online publication date: May 2011

4 - India, China and foreign investment

from PART I - China, India and the global trade system


The announcement of open door policies in Asia have largely applied to foreign investment as they preceded liberalization in the area of trade. China announced its open door policy in 1979 and India set in train less stringent foreign investment controls in 1992. Both events occurred well before the establishment of the World Trade Organization in 1995. To this extent, the developments as to liberalization in the area of foreign investment preceded those in international trade. The move towards free markets showed an ascendancy with the emergence of Thatcherism and Reagonomics and the fall of the Soviet Union, which removed a powerful competing model from the scene. Many factors at the time favoured liberalization of the foreign investment regime. The loans crisis arising from the circulation of petro-dollars had led to the drying up of private funds. Aid had become non existent. The states of Eastern Europe, released from Soviet hold and adopting free market economics, increased competition for the only means of private capital, the investments of multinational corporations. The situation was ripe for liberalization on a global scale. But, though individual countries did show fervour for the adoption of the liberalization model in their foreign investment policies, at the global level, the trend towards globalization has not resulted in global rules on foreign investment. With economic crises in Asia, Russia and Argentina, there has been some rethinking on the value of liberalization of foreign investment regimes.

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