Comparative analysis of the attractiveness of USA and India for FDI

1. Comparative analysis of the attractiveness of USA and India for FDI Group member:

3. Background Information USA • Aleading developed country • The world's third largest country in area with 50 states and a federal district. • One of the world's largest manufacturers • Has the largest consumer market in the world • Highly innovative environment • It has attracted the largest proportion of foreign direct investment (FDI) since 2006

4. Background Information India • Located in South Asia • The second-most populous country (>1.2 billion population) • Democratic government • Two major parties in the politics: BharatyaJanata party (BJP) and Congress • One of the fastest-growing economies in the global area • Diverse economy • The government made additional reforms to attract more FDI in 2012 • Significant national issues, eg. poverty, inadequate public healthcare, corruption and malnutrition

5. Definition of Comparative Ananlysis • Comparative analysis is a sort of approach which can be employed to compare and contrast two different things, including two countries, two theories, two figures, two processes. • It is based on the numerous collected data of two different cases. • By using comparative analysis, the similarities and differences between two different items can be clearly presented, from which some relevant decisions can be made according to the comparison results.

6. Comparison for four PESTLE factors of USA and India • Political • Economic • Social • Technological

7. Comparison for political factors of USA and India USA India Benefit Stable political system New projects in transportation sector and power generation. Risk Potential political instability due to its election in 2014 Cost The low working efficiency and the complicated process in Indian government departments • Benefit • Open investment policy • Policy of ‘Build where you sell’ • A promising outlook in trade policy • Risk • Potential terrorist attack • Cost • The federal budget deficits

8. Comparison for economic factors of USA and India USA India Benefit Growth in GDP, consumption and investment Risk The decreasing domestic resources –the lack of skilled labour force 52% of labour force is employed by the agriculture industry Cost Increased interest rate lack of infrastructure High inflation rate 3.8% • Benefit • The largest economy in the world • Decreased unemployment rate to 7% • Risk • The financial crisis in 2007 • Cost • Facing increasingly fierce competition

9. Health Expenditure share of GDP

10. Comparison for social factors of USA and India USA India Benefit Risk 6% of GDP expenditure in healthcare India HDI only ranks a low 134 among 187 countries Cost High level of corruption, ranks 94 of 176 countries with a score of 36 • Benefit • Healthcare expenditure in 2011 accounted for 18% of GDP • U.S had a HDI of 9.5%, ranking the seventh of 187 countries • Low level of corruption • Risk • Deliberate malware made by criminals may pose threat to the IT system of a company • Cost

11. Comparison for technological factors of USA and India USA India Benefit Advantage in technical manpower, particularly in information technology Expertise in call centres, business back –office operations, IT services, and R&D Risk If there is not sufficient budget for innovation，companies’ competitive edge may be damaged Cost • Benefit • Increase of long-term natural gas supply • Lower price of natural compared to European member countries • Advanced innovation capacity, with a particular strength in R&D • Risk • companies’ competitiveness may be damaged without sufficient innovation fund • Cost • The rapid development in the modern technology put heavy pressure on the R&D of a company

12. Conclusion and Recommendation for Austrade • The United States is a better destination for FDI • Advantages: highly supporting political environment, strong economy basis, better social environment and technological advantages • Similar culture background, language, social value and religion with Australia

13. Thank you !

14. References • Bureau E.T.(2012). ‘India seen as an attractive destination for foreign direct investment’, Retrieved April 8, 2014, from http://articles.economictimes.indiatimes.com/keyword/foreign-direct-investment • Central Intelligence Agency. (2013). Retrieved April 9, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html • Corruption Perceptions Index 2012, Retrieved April 8, 2014, from http://www.transparency.org/cpi2012/results • Foreign Direct Investment in the United States. (2013). Retrieved April 10, 2014, fromhttp://www.whitehouse.gov/sites/default/files/2013fdi_report_-_final_for_web.pdf

15. KorneckiLucyna. (2013). ‘Inward FDI in the United States and its policy context’. Retrieved April 8, 2014, from http://www.vcc.columbia.edu/files/vale/documents/US_IFDI_-_FINAL_-_REVISED_Feb_4_2013.pdf • Moran Zhang. (2013). ‘US November Jobs Report 2013: Unemployment Rate Falls To 7.0%, Nonfarm Payrolls Rise By 203k’, Retrieved April 8, 2014, from http://www.ibtimes.com/us-november-jobs-report-2013-unemployment-rate-falls-70-nonfarm-payrolls-rise-203k-1498230 • OECD Health Data: Health expenditure and financing, Retrieved April 8, 2014, from http://www.oecd-ilibrary.org/social-issues-migration-health/data/oecd-health-statistics_health-data-en

16. Politi James. (2013). ‘Barack Obama unveils plans to attract foreign investment’. Retrieved April 8, 2014, from http://www.ft.com/intl/cms/s/0/e3ad9d9c-41f4-11e3-9d3c-00144feabdc0.html#slide0 • Rapoza Kenneth. (2012). ‘On Political Risk & Terrorism, U.S. Riskier than Botswana’, Retrieved April 8, 2014, from http://www.forbes.com/sites/kenrapoza/2013/05/15/on-political-risk-terrorism-u-s-riskier-than-botswana/ • United Nations Development Programme. (2013). Human Development Reports Retrieved April 10, 2014, from http://hdr.undp.org/en/media/HDR2013_EN_Statistics.pdf.