© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

Mar 24

Investment in India



This article examines the relationship between the United States and India regarding their economies. The United States and India's trade in goods and service more than doubled over the last decade from $58 billion to $126 billion. Due to this large and successful increase in trade, both sides are determined to continue to find ways to improve bilateral trade and increase market access within the two countries. Exports for both countries have grown significantly. In 2018, the US exports to india reached nearly 30% and Indian exports to the US grew about 12%. The key to India's economic growth is due to its policies emplaced and foreign investment. The article states that due to India being a democracy, the US and India share many common values and aspirations. Specifically, both countries are trying to build modern efficient economies where businesses feel confident to invest and do business.


This article connects to the course concepts of the effect on multinational organizations and the role of democracy in development. In class we discussed how multinational corporations can either help developing countries economies or they can take advantage of their economy. Companies such as Facebook, WhatsApp, Tinder, and Uber have left a large footprint in India. The reason for foreign investment is so large in India is due to the structure and policies within their economies. Specifically, India has 100% FDI allowed in over 90% of sectors coupled with economic initiatives such as bankruptcy law, launch of commerical courts, and their IPR policy encourages innovation and creating an investor and business friendly environment. Due to the market and the policies within the country, the United States is able to benefit tremendously. While these policies look as if the United States is taking advantage of the growing Indian economy, the United States is actually trying to help it grow through promoting bilateral business. Specifically, the article states that the United States looks to continue "to helping India achieve its development goals." Part of the reason for this is due to the fact that both countries are democracies. Therefore the countries can trust one another which allows for future investment. Both countries provide law and order, enforce contracts, and have had large success over the last decade. All of which has helped with stability and certainty when dealing with trade between the two countries. While democracy has proven to be both good and bad for development, in this case it has proven to be beneficial.



New Posts
  • In his article for Foreign Affairs David Cohen talks about the Trump administration's policy towards sanctions. He talks about how the conditional sanctions the Trump administrations has placed on Iran and now Venezuela will be ineffective because the changes the administration is trying to coerce will essentially mean regime change for the two nations. Cohen goes on to state that these will be ultimately ineffective because the relative cost of the sanctions is lower than the cost of losing power. This means that the leaders of Iran and Venezuela are more willing to bear the pain of the sanctions than lose the regime. This goes along with the lesson we had on sanctions in a couple of ways. First we learned that sanctions are used either as a method of deterrence or coercion. This means that the sanctions inflict financial and economic pain to make the target of the sanctions take or not take an action. These sanctions are meant to cause political changes that will in essence mean a change of regime which is why they will fail. They are effective in causing pain; however, there is not enough sanctions in the world to make it worth losing power. Article link: https://www.foreignaffairs.com/articles/united-states/2019-04-29/sanctions-cant-spark-regime-change
  • https://www.nytimes.com/2019/05/09/us/politics/china-trade-tariffs.html Just before a scheduled round of trade negotiations began on Friday, President Trump announced that he was still going to levy additional tariffs on Chinese imports valued at approximately $250 billion. President Trump claimed that these tariffs would bring billions of dollars back to US manufacturers, but the main focus seems to be inflicting pain on China, as opposed to bringing prosperity to the US. China and the US have not been able to reach an agreement that would minimize or end outright the "trade war" between the two, which stems from the Trump Administration's belief that China is not doing all it can to protect American investments and intellectual property in China, as well as the belief that a large trade deficit with China is inherently bad. The Trump Administration's use of tariffs as a negotiating tool is inelegant, but effective. Unilateral tariffs immediately affect the Chinese export industry, whose products become less competitive in US markets. While this inflicts pain on Chinese exports, whose largest market is the US, it also affects US consumers, who have to pay higher costs for consumer goods. Additionally, because China retaliates with target tariffs (on politically-relevant goods like Kentucky Bourbon and soybeans from the Heartland), US exporters are equally hurt by the trade war. The only immediate winner is the US, who collects revenue from the applied tariffs; however, long-term, US domestic industry should improve, as they will become more competitive when Chinese imports are more expensive. Slowly, we are starting to see this happen: Dan DiMicco, the chairman of a lobby group "Coalition for a Prosperous America," explained that American manufacturing is already experiencing gains in their domestic market shares.
  • https://www.washingtontimes.com/news/2019/may/8/feds-release-168k-illegal-immigrant-family-members/ In Stephen Dinan's article in the Washington Times, he explains the unforeseen immigration due to illegal border crossings. ICE border patrol has released 168,000 illegal immigrant family members this fiscal year, and the number is expected to increase as the border situation increases in volatility (Dinan). Dinan reports that 87% of families in this new pilot program skip their court hearings, and with an ill-equipted government to track them down judges deport them in absentia (Dinan). Dinan argues that this increase in illegal immigration in family units is caused by a 2015 court ruling that stated parents who travel with children must be released in 20 days. Since this is too little time try them in court, the families are set free (Dinan). This article is very relevant to this block in IPE as it highlights a crucial phase that the world is going through. As policies towards free and open borders begin to gain more and more traction, we can expect the number of border crossings into the country to continue. As we talked in class, this may actually be a good thing for the economy, as low skill labor is substituted due to a higher rate of college attenuation and graduation. Dinan says that most migrants interviewed are not criminals, they are just seeking jobs, and know that if they bring children they will find asylum in the US (Dinan). One of the unintended consequences is that some of these migrants are being used to smuggle drugs and weapons into the country, and in some extreme cases, children are being sold to impersonate children of felons migrants of south american countries to gain access with ease. As globalization brings countries closer together and as the trend for free an open borders continues incentivizing cheap labor, it will be interesting to see the effects of these policies 10-15 years in time.