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A Comparative Analysis of the Effects of Foreign Direct Investment on China’s and India’s Economic Development in Recent Years


Marc Lombard, Faculty of Business and Economics, Department of Economics, Macquarie University, Sydney, NSW 2109, Australia. Email:


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.