sep 7th, 2007
add to the last line of the article:
"and because india is far more efficient than china at using the meager FDI flows". this is according to tarun khanna of harvard and a chinese guy from mit.
http://www.economist.com/daily/news/displaystory.cfm?story_id=9769084&fsrc=nwl
also, india generates huge amounts of capital, i would imagine the black economy is at least as big as the reported white economy. much of india's capital was hidden/black/underground during the heyday of the nehruvians and 97% marginal tax rates, but now it is coming out -- mostly in real-estate speculation, alas -- but that is sufficient to sustain growth under today's dispensation.
fdi is like 'foreign aid'. it's a nice sounding euphemism that is not quite as wonderful as you might think. there are lots of strings. otherwise why were the yanks bleating 'national security' when the chinese tried to buy a californian oil company, or the arabs tried to buy a bunch of american ports? why are they so concerned these days about sovereign wealth funds, that is, the likes of temasek of singapore, that are huge private equity funds controlled by governments? incidentally, i was quite happy to note that the chinese sovereign fund (bloated by the $1 trillion in reserves held by them) lost a chunk of change when they invested in blackstone, and the hedge fund's value plummeted immediately thereafter!
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