14 December 2001, Hindustan Times

IS FOREIGN Direct Investment (FDI) good or bad for the recipient nation? This was the question that participants at a two day seminar on ‘Investment for Development,’ That began in the Pink City on Thursday grappled with, in the process kicking of a lively debate on the whole issues.

While none of the participants, including experts, economists, Government officials, industrialists and trade unionists, opposed FDI in principle, some trade union leaders expressed the fear that foreign investors force changes in domestic regulations that adversely affect the workers. Subscribing to this view were the trade union leaders of left of the centre and right wing political affiliations.

If D K Chhangani of All India Trade Union Congress (AITUC) accused the foreign investors of forcing `hire and fire’ kind of labour policy changes, G S. Gill of Bharatiya Mozdoor Sangh (BMS) alleged that acquisition of domestic companies by the investors always ended up in job losses. Both of them felt that these changes undermine the aim of equitable development.

Secretary, Industries, Arvind Mayaram said that policy changes should focus on job creation rather than job protection, as if to address the apprehensions expressed by the trade union leaders. International experts present at the seminar, organised by CUTS Centre for International Trade, Economics and Environment (CUTS-CITEE), drove home the point that FDI was vital for poverty reduction through economic growth. However, governments have to make sure that right policies are in place if they are to attract and benefit from world FDI flows.

Almost all the FDI flow to developing countries go to a handful of nations, while 90 per cent of countries are effectively forgotten by the investors, said Khalil Hamdani of UNCTAD, corroborating on CUTS CITEE’s project.

FDI is recognised as a major potential contributor growth and development that brings capital to the host country and technology, management know how and access to new markets, he said. In comparison with other forms of capital flows, FDI is more stable, which is why several countries are pursuing investment friendly policies and actively seek FDIs, the UNCTAD official said.