Taxing foreign inflows

oct 5th, 2009

a lot of FDI is not necessarily a good thing. while it may mitigate the evil effects of the UPA's disastrous printing of money, it may make the market look more attractive than it is.

however, let us note that the chindu has been gloating about the large amounts of FDI flowing into china as an indicator of how wonderful that country is. 

---------- Forwarded message ----------
From: Giris

http://www.hindu.com/2009/11/02/stories/2009110255050800.htm   Brazil's recent decision to impose a two per cent tax on portfolio inflows has wide ranging implications for global finance and for countries such as India. The move is aimed at arresting the sharp appreciation of its currency, the real, which since the beginning of the year has gained 36 per cent against the dollar, undermining Brazil's export competitiveness.   The intellectual basis for the tax is found in the work of the influential U.S. economist and Nobel prize winner, James Tobin who in the early 1970s proposed a small tax — even as low as 0.1 per cent — on foreign exchange transactions to reduce volatility in the markets. Until the Asian crisis, the idea was not popular and even after that it had only sporadic political support. Recently, however, the G20 has asked the IMF to examine such proposals.