• foreign direct investment;
  • China;
  • India
  • F1;
  • F3;
  • N05;
  • N07

This paper attempts, through a comparative analysis, to assess the significance of foreign direct investment to the growth and development of both China and India, from the period following the introduction of economic reform programmes, to the last few years. It suggests that foreign direct investment (FDI) has had a significant positive bearing on the Chinese economy and a considerably more moderate effect on that of India. This discrepancy is attributed, in particular, to the composition and nature of FDI, and the institutional framework within which FDI is received.