FDI Current Affairs - 2020

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World Bank Study: Effect of Automation on FDI flows

On January 6, 2020, the World Bank released its study on how FDI flows are affected in the world due to automation. The study concluded that automation will certainly disrupt the flow of capital from rich countries to poor countries. On the other hand, the poor countries can gain from automation if adopted at the right time.

Highlights

The study has used data of FDI (Foreign Direct Investment) and industrial robot usages between 2004 and 2015. It reports that during this period, High Income Countries (HIC) saw the highest FDI outflows. The flow of the FDI were measured in terms of project announcements in middle income countries (MIC) and low-income countries (LIC).

The MIC and LIC witnessed highest FDI inflows during the period of project announcements. Later, it reached a saturation level and began to decline!

Throughout the study the automation processes were measured in terms of number robots employed per 1000 employees.

The study also reports that of all the sectors, automation was maximum in electronic and automobile industries and least in textiles.

Findings

The study found that the FDI flows from a HIC to a LIC reduced as automation increased. For a 10% increase of automation in a HIC, the flow of FDIs into LMIC increased by 5.5%. After a certain threshold the inflows saturated and, in some cases, started to decline as well!

India-ASEAN Summit, 2019

PM Modi attended the 16th India-ASEAN summit held at Bangkok. The current ASEAN summit is being held in Bangkok, Thailand and the next ASEAN summit is to be conducted in Vietnam in 2020.

Highlights

  • India has allocated 1 billion USD as line of credit to improve physical and digital connectivity.
  • India highlighted that the India-ASEAN summit, 2018 and Singapore informal summit has brought India and ASEAN closer
  • India looks forward for cooperation in the areas of engineering, agriculture, science and ICT.
  • India has also expressed its readiness to improve its partnership and capacity building in areas of research, agriculture, engineering, science and ICT.
  • India also highlighted that it is looking forward to strengthen cooperation in the areas of blue economy and maritime security
  • India believes that Act East Policy is a significant cornerstone of the Indo-Pacific Strategy

Significance of ASEAN for India

  • ASEAN comprises of Singapore, Malaysia, Philippines, Indonesia, Thailand, Cambodia, Brunei, Myanmar, Lao PDR and Vietnam.
  • ASEAN is India’s fourth largest trading partner. India’s trade with ASEAN stands at 81.33 billion USD.
  • FDI inflows from ASEAN between 2000 and 2018 into the country has been 68.91 billion USD. The FDI outflows from India to the countries have been 38. 672 billion USD.