Foreign investment and its development in pre and post economic reform era in India

Globalisation can be summarised as opening-up of markets, leading to transfer of capital, technology and people. If globalisation is a progression in the international economic relations, it implies that capital flows are substituting trade flows. These capital transfers work as two way relationship, which implies that the process of globalisation should have gains for both the home country and the host country. With globalisation (WTO) and liberalisation international long-term capital flows in the form of FDI are promoted. Capital is the complementary input to labour, natural resources, infrastructure etc. This leads to international relocation of production. If such flows follow rational allocation, it will lead to global optimum allocation of resources and global economic welfare. This will lead to a visible relationship between socio-economic variables (economic development) such as labour, human resource, infrastructure, openness, market, resources etc and the patterns of FDI flows internationally. This paper tries to analyse the pattern of growth in FDI during the pre and post economic reform era of India. This study is based only on the secondary data which is collected from websites, journals, research papers, magazines and books.