Globaliastion Essay Example | Topics and Well Written Essays - 2000 words

Globaliastion - Essay Example The deregulation of the FDI abroad, that has taken place in these two countries have lead to the accumulation of more capital and confidence to the companies who have gained them. Now these companies are taking opportunity of the situation by spreading their wings and investing overseas (Duanmu and Guney, 2009).One cannot deny the fact that globalization is here to stay and today new markets can be tapped owning to the advancement of the world economy through peaceful and careful economic efforts (Klein, 2005). Globalization can neither be called good nor bad. It is only a step towards efficiency in the long run and painful cultural and social adjustment in the short run (Mundell, 2000). Rise and Economic amalgamation of India and China China and India have become the most preferred destinations for international business, which has been confirmed by some of the major studies carried out by Ernst & Young (2008), KPMG (2008) and PriceWaterhouseCoopers (2008). Zheng et al. (2006) has f ound out the factors for such an interest. They found that market growth, liberalist policies, lower labour cost and the amount of goods imported from both the countries by the countries of origin of the FDI are factors of interest to them. However specifically they pointed the bigger size of Chinese market, strategic location in terms of logistic and geography, export volume and greater borrowing cost of China makes it more attractive for the FDIs. On the other hand in case of India though geographical distances discourage FDI, closure distance in culture encourages it. In the year 1980 both India and China accounted for a trivial 2% of global output, which increased to 7% in the year 2005 (Das, 2010). It is expected that both the economies will achieve an excellent bit of convergence with the fully grown industrial economies in the near future. Though they have recorded a rapid growth but their per capita incomes are seen to be significantly low. According to the data published by World Bank (2008a), the per capita income of China in 2007 was $2360, whereas that of India was $950, which were much lower when compared to the per capita income of UK, USA, Japan and Germany. The average per capita income recorded by the Euro zone economies in the year 2007 was $36,329. On one hand the industrial economy and on the other the income disparity between India and China provides an opportunity for larger gains from trade with both India and China. The large gap in the wage level can help them to earn huge benefits by adjusting the productivity. Both the economies have started utilizing from the trade gains. In the year 2007, the GDP of China at the market exchange rates was $3280 billion, making it the fourth largest economy in the world. At the same time the GDP of India was at $1170 billion, making it the twelfth largest economy in the world (World Bank, 2008b). When economies of these huge sizes are seen to amalgamate globally, massive impacts are bound to occur th at would affect the global trade, financial flows and pace of globalization. This signifies that the role of these two economies is going to be significant in the global economy. The projection made by Maddison (2005) suggests that by measuring in terms of purchasing power parity (PPP), the GDP of China will be seen to record few more than 18% by 2030. This means that it will overtake US. The GDP of India has been projected to be half of that of China. This fast growing economy has attracted the attention of many of the