Foreign direct investment (FDI) share in emerging markets is growing larger than in developed markets, according to a study released by Ernst and Young (E & Y) on globalisation. In 2009, emerging markets garnered a high 51.6 per cent share of FDI, mainly due to a steep fall in FDI into developed markets, almost half of that in 2008.
According to John Ferarro, global chief operating officer, E & Y, as the economy recovers in 2010, the growth of globalisation will once again resume. Mr Ferraro also said that the study’s main insights are the flow of capital moving from West to East and the change in demographics.
Ernst and Young has created, along with Economist Intelligence Unit (EIU), a globalisation index which measures the relative level of a country’s global engagement based on broad parameters such as trade openness, capital flows, labour movement and cultural openness. The index ranks India at 46 with China at 40, while countries like Singapore and Ireland, lead the index. India incidentally has the highest score in trade openness.
Amongst the large, fast-growing BRIC economies, India has begun focussing more on new opportunities arising in its big domestic markets. Though technology remains the main driver in creating a more integrated world, India has still to improve its score. Further, according to the study, as emerging markets’ companies challenge established corporate giants, companies will need to revamp their overall strategy from fund raising to how they source their products.