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The Foreign Direct Investment Confidence Index® - A.T. Kearney
Don't have an account? Sign in via your Institution. Sign in with your library card. Search within In This Article Curse or Blessing? Abstract and Keywords Historically, foreign direct investment FDI has had an ambivalent role in terms of its contribution to development, especially how it shaped the productive sector in Latin America, such that it became a recurrent theme in the region's economic literature. All rights reserved. Sign in to annotate.
Latin American economy
Delete Cancel Save. Indian exports increased elevenfold over the next 10 years. For their part, Indian industries discovered that Latin America provided a natural outlet for many of their products, including such traditional goods as textiles and garments as well as newer products like cars, pharmaceuticals, chemicals, and cosmetics. In some cases, they found that the middle-income countries of Latin America offered better markets than those of North America and Western Europe.
A preferential trade agreement between India and Chile went into effect in , and another between India and Mercosur followed in Warmer diplomatic relations also followed. In the first 50 years of Indian independence, only 12 presidential visits from Latin America to India took place. In the decade between and alone, there were Although no Chilean president had ever visited India, two did so in quick succession—Ricardo Lagos in and Michelle Bachelet in Joined by the acronym that defined the decade BRICs, the term coined by Goldman Sachs to refer to the emerging powers of Brazil, Russia, India, and China , and despite differing interests on some key issues like agriculture, Brazil and India have together taken on the role of leading the New South —that is, the post—Cold War developing world.
This is particularly true on the economic front. Brazil has what India lacks: a large and fertile land mass with abundant water that can significantly increase the production of food—something India will always need, be it soybean oil, legumes or sugar.
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The same goes for energy sources. After discovering enormous oil fields off its southern coast, Brazil is becoming an energy powerhouse, while India imports 70 percent of its oil needs.
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A Brasilia—New Delhi axis will thus continue to ground the emerging international global architecture. Some people argue that, because China represents 7. This notion is based on a misconception. As noted economist Manmohan Agarwal has shown, if one allows for the year difference between the opening of the Chinese economy in and that of the Indian economy in , per-capita income, exports of goods and services as a share of GDP and foreign direct investment FDI inflows in India show similar trends to those seen in China a decade prior.
In China, exports of goods and services as a share of GDP rose from 6 percent in to 20 percent in ; in India they increased from 7 percent in to 20 percent in The potential growth in demand for commodities and other Latin American exports is sizeable. There will be no trade gap, just a trade lag. Most Indian trade and investment with Latin America is done by private Indian companies.
Indian exports to the region are not a threat to Latin American industries.
Over half of them consist of raw materials and intermediate goods such as bulk drugs, yarn, fabrics, and parts for machinery and equipment, which can help Latin American industries cut production costs and become globally competitive. Indian IT and business process outsourcing companies are propelling Latin America into the information age and training human resources for the knowledge economy. Bangalore has become a mandatory destination for Latin American delegations visiting the Indian subcontinent.
Realizing the potential of Indo-LAC partnerships requires overcoming mental, not geographic, hurdles. On the Latin side, many companies are unaware that, to take full advantage of the growing Indian market, they need to tailor production to specificities, as many Latin businesses already do with China. On the Indian side, many companies, busy with their internal market, still do not focus sufficiently on Latin America.
This contrasts with Chinese companies, which have the capacity and confidence to serve both their huge domestic market and foreign ones. Due to domestic and regional foreign policy issues, Indian leaders have also found it difficult to pay the sort of attention to Latin America that China has.
Over the past decade, Chinese presidents, prime ministers and foreign ministers have paid many visits to the region. In that same period, the Indian prime minister has visited only two countries in Latin America Brazil and Cuba , the president three Brazil, Chile and Mexico , and the foreign minister just a few.
Changes in Latin American Attitudes
Chinese concessional credit lines are ample and available to countries big and small, whereas Indian ones are smaller and confined to a few Caribbean and Central American nations. Additionally, high freight costs and a lack of direct shipping lines present continued obstacles, which can be surpassed, as the Chinese have shown.
India is emerging not just as a valuable trade partner to Latin American nations. Views expressed in this article are personal and do not necessarily reflect those of the Government of India. BY Jorge Heine and R.