The Indication which shows the increase of per capita gross domestic product (GDP) or other measure of aggregate income is called “Economic growth”. It is often measured as the rate of change in GDP. Economic growth refers only to the quantity of goods and services produced.
Economic growth can be either positive or negative. When economy is shrinking, that can be referred to Negative growth. Negative growth is associated with economic recession and economic depression. And when economy is expanding, that can be referred to Positive growth. It is associated with economic boom and economic explosion (growth).
There are some critical arguments have been raised against positive effects of economic growth.
Income distribution
Quality of life (e.g. Happiness)
Resource depletion
Environmental Impact
A number of critical arguments have been raised against negative effects of economic growth.
Quality of life (e.g. crime, prisons, or pollution, “uneconomic growth”.)
Growth 'to a point'
Consumerism
Environmental Impact
Equitable Growth
Budget 2010-11 with a GDP growth rate target of 4.5 per cent for next year presented
PPI 05 June 2010 Saturday | 14:52:00
Islamabad, Minister for Finance Dr Abdul Hafeez Sheikh Saturday presented a three point one trillion rupees budget 2010-11 in the National Assembly and termed it an investment, poor friendly and tax free budget for the next financial year.
He said,
Expected growth in Foreign Direct Investment is up to 15% as compare to 12% during the last fiscal year.
Projected export for the coming financial year grows by $19.9 billion as compare to current financial year’s target of $19.2 billion.
Increase in imports for the coming year has been projected by $31.7 billion.
Current account deficit is being targeted at $6.5 billion which would be 3.4 percent of the GDP in the next fiscal year.
The revenue collection has been targeted for the coming year at Rs.1667 billion.
Rs.1975 billion has been earmarked for current expenditures.
For debt retirement six hundred and eighty billion rupees have been allocated.
GDP growth rate has been target four points five percent (4.5%) as compare to four point one (4.1%) percent achieved during outgoing year.
Six hundred sixty three billion rupees are allocated to Public Sector Development Program in which special emphasis has been laid on the power sector for launching of new and completion of on- going projects for overcoming the energy crisis.
280 billion rupees have been earmarked for the federal government development program while 375 billion rupees have been allocated to the provinces for their development programs.
Strict measures will be taken to bring down the budget deficit from five to four percent during the next financial year.
Growth rate for other sectors 3.8 % for agriculture, 5.6% for manufacturing and 4.7% in services sectors set for the new financial year.
The economy is expected to continue to grow gradually through firm path of increased economic growth with lower inflation and continued support to protect the poor and vulnerable.
Investment in people, knowledge generation activities besides economic and institutional reforms would be ensured to enhance productivity and improvement leading to sustainable and inclusive growth.
India could grow by 8.5% in coming fiscal year asked by Manmohan Singh PM of India.
During a conference on Building Infrastructure hosted by the Planning Commission the Hindu Prime Minister Manmohan Singh with Finance Minister Pranab Mukherjee: Oppertunities & Challenges in New Delhi on Tuesday.
‘Mr. Manmohan says GDP to grow at 8.5% in Q$4’Farm recovery likely current year’
There are three topics following as under
Business (general)
Economy (general)
Finance (general)
Prime Minister Manmohan Singh on Tuesday showed confidence about Indian economy.
He said Indian economy will grow by 8.5 per cent in the coming financial year and go faster to 9% the following year from an estimated 7.2 % current fiscal.
For creation of employment for the youth and remove poverty, there should be expansion in economic to above 10 per cent per annum in the 12th Five Year Plan (2012-2017).
He said “We expect to achieve 8.5 per cent growth rate in the year 2010-11... I hope we can achieve growth rate of 9 per cent in the year 2011-12,”
Mr. Singh want the growth target of economy must be above 10% per annum. This is due to elimination of poverty and providing productive employment for young population in near future.
Indian economic growth declined due to the global financial crisis by 6.7%, after growing at over 9% in the three earlier years.
Economic growth at 7.2% in the current financial year estimated by the Central Statistical Organization (CSO), this is done due to the three financial incentive packages given by the Government to support the economy.
For the period of the 12th Five year Plan ending 2017 from the existing level, the investment in the infrastructure should be doubled to about Rs. Ten billion.
He said, “Preliminary exercises suggest that investment in infrastructure will have to expand to USD 1,000 billion in the 12th Five Year Plan. I urged the Finance Ministry and the Planning Commission to draw a plan of action for achieving this level of investment,”
Country needs an investment in infrastructure of over one trillion dollars in the 12th five year plan asked by Planning Commission Deputy Chairman Montek Singh Ahluwalia.
Investment criteria, broadly speaking, refer to the codes which oversee “capital allocation” in an economy. The subject of ‘capital allocation’ assumes greatest importance in the peculiar conditions of under developed countries which are mostly capital-starved. Capital, being the hub of all economic development also in short supply, can only be economic development and also in short supply, can only be used very judiciously. The economy and efficiency in the use of capital are thus the abiding concerns of planners. There is however no consensus among the economists on the issue of ‘criteria’ or ‘rules’ which should govern capital allocation, or tests or standards or touchstones by which an investment decision may be judged. Investment ‘criteria’ have there for proliferated depending upon the specific objectives and economic priorities set forth by national leaderships.
There is a frequent change in governments of Pakistan and India and also rapid changes in policies and programs which are shattered the confidence of foreign investor to spend or invest their money.
New government must continue and make better those policies of previous Government for the best interest of the country and the investors.
Law and order situation of a country can force to an investor to invest in that country. Unfortunately, law and order situation in Pakistan and India is not satisfactory which keep away the potential foreign investors from invest in both countries. Safety of capital and the security for the personnel engaged in the projects are essential ingredients that govern foreign investment.
It is the Governments’ responsibility to make better law and order situation which is suitable and beneficial not only for the country but also for the investors.
It is the responsibility of the both governments to make the economic fundamentals of country are strong and predictable, then investors would want to invest in that country because the investor thinks that his or her investment in that country is safe.
Through special regulatory order the head of the state can overnight amend of alter the existing laws. The purpose of SRO’s to enhance the scope and intent and makes the business environment in a country. But some time it is not good for the investors. SRO’s issued under a particular law.
Both countries are democratic, the governments of both countries try to pass the law from the parliament and not issue the SROs by the president or prime minister’s.
Protected and friendly business environment is very essential for growth of FDI. Educated and skilled manpower is also essential for better business environment.
It is the responsibilities of the governments to improve local education system and trained the manpower according to the requirement of the market in the country and availability of ancillary & supporting industries etc. which are required both before and during the life of a project.
Infrastructure is life blood of the economy of every country. Infrastructure consists of communications, power, telecommunications, water, etc. It is the responsibilities of Pakistan and Indian governments to improve its infrastructure facilities to make business environment conducive to foreign investment.
Pakistan and India have record of economic growth in sixties as well as in the recent past. The countries have often come out with pro-investment policies. However, the ad-hoc-ism, and poor implementation of policies have been distorting the system. In order to attract more and more foreign investment, Pakistan and India have to ensure continuity of economic policies coupled with political stability.
Legal cover for foreign and local investment will be extended to new areas and sectors.
The benefits and incentives for investment provided by the Government shall continue, enforce and will not be reduced or altered to the disadvantage of investors.
The Acts like Foreign Private Investment (Promotion and Protection) Act, 1976 and the Furtherance and Protection of Economic Reforms Act, 1992 cover protection of foreign investors / investment in the country.
1985-86
93.7
106
1986-87
161.7
118.0
1987-88
129.0
212.0
1988-89
172.7
90.0
1989-90
216.2
252.0
1990-91
211.5
162.0
1991-92
237.0
141.0
1992-93
553.6
151.0
1993-94
443.2
273.0
1994-95
642.7
620.0
1995-96
1,532.3
1,750.0
1996-97
1,306.9
2,400.0
1997-98
949.5
3,351.0
1998-99
822.6
3,370.0
1999-00
499.6
2,439.0
2000-01
543.4
4,029.0
2001-02
182.0
6,130.0
2002-03
474.6
5,035.0
2003-04
820.1
4,322.0
2004-05
921.7
6,051.0
2005-06
1,676.6
8,961.0
2006-07
5,139.6
22,826.0
2007-08
5,152.8
34,835.0
2008-09
3,179.9
35,180.0
FDI creates an optimistic effect on economic growth in mass countries. It consists of capital, technology, management, and market access.
FDI is a major cause of much needed capital but is also considered be a major means for the access to advance technologies, organizational and managerial skills. Globally, it has grown rapidly in the recent years, faster than international trade. It has a optimistic overall effect on economic growth but the scale of this effect depends on the stock of human capital available in the mass economy and its strategies. The initial impact of an inflow of FDI is increase on the mass country’s imports of raw material and services and repatriated profit and balance of payments (BOP) is positive which adversely affects the BOP.
In this context Feldstein and Razin (2000) and Sodka (forthcoming) note that the gains to host countries can take several other forms:
Transfer of capital and technology is not possible through financial investment in goods and services but allows by the FDI
Competition in the domestic input market is promotes by the FDI
FDI is generated Profits contribute to the corporate revenue in the host country
FDI is help out to employee for learning of operation of new business in the host country. This contributes to human capital development of the host country.
Beneficial foreign direct investment is a main part of the economic development strategies for a country. Towards the economic growth of the country the domestic capital, production level and employment opportunities take place a vital role; it ensures by the FDI. The effects of FDI are by and large transformative. The incorporation of a range of well-composed and relevant policies will boost up the profit ratio from Foreign Direct Investment higher. Some of the biggest advantages of FDI enjoyed by India have been listed as under:
Foreign direct investment can effects the Economic growth because it is a one of the major sectors which can be increase or decrease the economic scale of a country. An extraordinary inflow of FDI in various sectors in a country has enhanced the economic life of country.
FDI is facilitates the opportunities for import and export production in a country. If there is greater amount of FDI inflows in the country, the country will manufacture superior quality products.
The poverty level of a country will reduce due to better FDI inflows and it also creates or facilitates a number of employment opportunities by establishing new projects in different sectors in various corners of the country.
With the help of FDI country can transfer or get knowledge especially in the information technology sector from other country. It is helpful to enhancing the technological advancement in a country.
To get maximum profits and benefits from the targeted market of a particular country, there must be a Joint Ventures and Collaboration.
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