Chapter 6 Determination of National Income

News Article Title: Foreign investors face Indian barriers
http://news.bbc.co.uk/2/hi/business/6636241.stm


Summary of the News
A recent report from global consultancy firm McKinsey says that in the next two decades, India's consumption boom could overtake Germany's. Many foreign investors are trying to convince Indian economic gatekeepers they should be allowed in but it is not easy. Why is it still very difficult for foreign investors to come into Indian market when it's shown that their investment has a very positive impact on the growth of Indian economy? Some says it limits down the competitions from foreign countries. "If you don't know what your strategy is going to be, then it will be very difficult for you to stay here. “For foreign investors battling to get into India, it's these young consumers and their new buying power that are worth the fight. ”


Relation to the Chapter
Relatively to Chapter 6, we talk about the changes in Gross Domestic Product (GDP). Household savings & investment, the government & foreign-trade sectors and some other factors can make the changes in the level of GDP. Investment is the most volatile component of GDP. In this case, the powerful consuming ability of the young Indian generation attract many foreign investors come into Indian market. There are many elements can alter investment spending, such as the interest rate, innovation and changes in technology, government policy and taxes, expectations, replacements, cost of capital goods, and GDP. Investors' expectation toward Indian‘s booming economic and the change in government policy are the two major reasons why foreign investors are desperate to come to India; but still, it seems that Indian government selects the foreign investment carefully, and the local businesses are not very friendly to the competitors. 'We are looking for some concessions from the government." says Tim Hoelter.


Personal ideas
"India, being democratic, gives confidence to foreign investors". Gradually, a lot developing countries, like China, India attract investors' attention because of the changes in their political party's philosophy and the booming economy.Some foreign investments will certainly help the developing countries, meanwhile they also bring in competitions. Competitions are always beneficial for citizens but for local small business, there are more disadvantages. Since there are more money flow into the country's construction, government will have more spread money to spend on other fields. Sum it up, although there can be disadvantages for foreign investments, overall, there are more advantages. Developing countries like India, should open their doors and welcome more foreign investors.