The Economic and Social Impacts to India and Its Citizens from Inward Foreign Direct Investment

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1.3: Structure of the thesis

Chapter Two examines the wider context of globalisation, FDI and developing countries. Aspects of economic globalisation that enable the speed, volume and ease of FDI to flow across national borders are discussed as well as the political decisions and institutions that promote, influence and, at times, enforce the liberalisation of national economies in the promotion and facilitation of open global markets (Coyle, 1999; Gilpin, 2001; Peet, 2003; O’Brien and Williams, 2007; Holden, 2014). Also included are explanations as to why developing countries clamour after FDI and go to great lengths to attract it (Lipsey, 2003; Farnsworth, 2004, 2010). This leads to explorations and a review of hypothetical arguments and empirical evidence concerning the costs and potential benefits of FDI to host countries. Overall, this chapter investigates the reciprocal relationship between TNCs and developing countries as both want to extract and exploit the resources and opportunities that the other can provide (Nunnenkamp, 2002; OECD, 2002, 2008; Chang, 2003; Moran et al, 2005) and it will examine the implications that flow from this reciprocity.

Chapter Three shifts the debate towards the relationship between the economy and social policy. It considers the needs and interests of business and this has implications for the social welfare of the host country (O’Connor, 1973; Offe and Ronge, 1984; Gough, 1979; Farnsworth, 2004, 2010, 2012). Business investment decisions can influence the policy decision making in host economies in important ways (Hirschman, 1970; Fisher, 1994; Fuchs, 2005; Farnsworth, 2004, 2010). The factors that serve to both propel and constrain the ability of business to influence social policy outcomes (Gough and Farnsworth, 2000; Farnsworth, 2004, 2010) are highlighted. It is argued that businesses depend upon the state in various ways just as citizens depend upon the state for social welfare (Gough, 1979; Glasberg and Skidmore, 1997; Farnsworth, 2012). However, while social welfare is helpful to business, economic growth and the competitiveness of state’s economies (Gough, 2000), mainstream development agendas continue to prioritise the needs of business and economic growth over social welfare (Marques and Utting, 2010; Farnsworth, 2010) which is conceptualised as an ‘add on’ to future economic development (Mkandawire, 2004). The issues of corporate harm, cost, crime and risk will be explored as will issues pertaining to corporate social responsibility. Following this, examinations of the role of the state to effectively implement social policies that mitigate for corporate risk and extract potential benefits are discussed. Overall this chapter explores the reciprocal relationship between social welfare and business and the implications that flow from this reciprocity.

Chapter Four observes India’s transition from a closed economy with an import substitution industrialisation model of development to an open economy aligned with global markets in 1991. When India liberalised its markets, it did so against a backdrop of widespread inequality and lack of social policies to address and restructure the social divisions (Dreze and Sen, 1995; Chandrashaker and Ghosh, 2006). The resulting economic and social welfare trajectory that followed liberalisation will be explored coalesced with the role that FDI is playing in India’s current growth pattern. Inequality and poverty in India are explored as well as the impact of the global financial crisis to India and developing countries. The final section of this chapter will discuss and provide justification for the research questions used in this thesis.

Chapter Five describes the methodological approach. The first section will discuss and provide justification for the research questions used in this thesis. Next the chapter will explore the methodology of the single case study utilised here. The selection of the sample, data collection and data analysis is described as well as how my personal characteristics impacted my time in the field. Following this, an exploration of the ethical issues, including anonymity and confidentiality is conversed here. This chapter concludes with a discussion regarding obstacles encountered in the field.

Chapter Six is the first of four empirical chapters. It will analyse India’s investment strategies by utilising data from investment bureaux to gauge how India is selling itself to investors and consider the implications for social welfare. The chapter will analyse two investment policies: Foreign Direct Investment in Multi-Brand Retail Trading Sector and the National Manufacturing Policy, 2011. Respondent’s views on the policy’s potential harms and benefits to India will be explored as well as the policies’ directives. The two policies are in contrast to one another in their level of afforded protections to mitigate costs and maximise benefit. The contrasting degree of protections afforded will be explored by extrapolating from considerations from Chapter Three regarding the variability of business power to influence policy outcomes.

Chapter Seven will explore the types of FDI attracted to India and elite policy stakeholder’s perceptions of social and development consequences that have resulted from FDI. This will lead to a discussion of what is perceived to be holding back manufacturing FDI.

Chapter Eight is the third empirical chapter and will explore elite policy stakeholders’ perceptions of the Indian government’s ability to balance the needs of business and its citizens in the overall development strategy. As informed from discussions in Chapter Three regarding the corporate and social welfare continuum and the tendency for development agendas to promote the needs of business over and prior to social welfare, this chapter will explore perceptions of the Indian government’s development agenda and its valuation of economic and social development, respectively, within its development priorities.

Incorporating discussions from Chapter Two concerning possible spillovers from FDI, Chapter Nine will explore respondents’ views of what spillovers, both helpful and harmful, are occurring as a result of TNC investment in India. Following on from discussions of deleterious corporate behaviour in Chapter Three, this chapter examines issues concerning exploitation, child labour and land displacement.

Chapter Ten draws together the findings and discussions from the research and brings the thesis to a conclusion. It will summarise how the research questions have been answered and the wider implications of these findings, the original contributions to knowledge, the limitations of the research project and, finally, policy recommendations for both India and developing countries in general.

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