The potential impact of foreign direct investment (FDI) on a national economy is perhaps best measured as FDI as a fraction of Gross Domestic Product (GDP).
The nation as an FDI magnet is perhaps best measured as FDI as a fraction of World FDI.
Here are a pair of charts, for India and for China of FDI as a percentage of GDP from TheGlobalEconomy.com. Note that the two charts are not to the same scale.
However, global flows of investment are quite volatile. Using the UNCTAD World Investment Reports and its country profiles (India, China) as a source, one can construct the table below. Note that UNCTAD numbers are not consistent across years, e.g., the 2008 FDI figures are a little different when noted in the 2009 report vs the 2010 report, etc.
For 2017, UNCTAD estimates (January 2018) world FDI was $1520 billion, with China at $144 billion and India at $44 billion. That would put China at 9.5% of world FDI, and India at 2.9%. The "official" numbers should be published in a few weeks.
China attracts increasing amount of FDI in absolute terms, and a generally increasing share of world FDI, and yet the significance of the FDI for its economy, in terms of FDI as a fraction of GDP is declining. In India, the UPA government choked the golden goose, and the NDA government is reviving it; but the relevance of FDI to the Indian growth story is still much less than it was for China at an equivalent stage of development.
POSTSCRIPT:
While obvious, it bears pointing out that e.g., a national economy that is 0.5% of the world economy cannot be expected to get 5% of the world's FDI. So the best estimate (and probably the most difficult to accurately measure because of the cumulative issues, e.g., that lead to PPP estimates of GDP) of FDI attractiveness would be the ratio of the world's FDI to the size of the nation's economy relative to that of the world. A country with 0.5% of the world economy that attracted 0.5% of the world's FDI could be said to be holding its own, and underperforming if it attracted only 0.4% of the world's FDI.
This World Bank document gives for 2016, world GDP as $75871.742 billion, India as $2,263.792 billion and China as $11,199.145 billion. India is thus nominally 2.98% of the world economy and China is 14.76% of the world economy. So while both countries were growing faster than the world average in 2016, they were underperforming relative to FDI in the above sense. One has to ask, which are the countries that are overperforming relative to FDI; my guess, only a guess, would be Singapore is one.
The nation as an FDI magnet is perhaps best measured as FDI as a fraction of World FDI.
Here are a pair of charts, for India and for China of FDI as a percentage of GDP from TheGlobalEconomy.com. Note that the two charts are not to the same scale.
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| India - FDI as a percentage of GDP 1991-2016 |
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| China - FDI as a percentage of GDP 1991-2016 |
However, global flows of investment are quite volatile. Using the UNCTAD World Investment Reports and its country profiles (India, China) as a source, one can construct the table below. Note that UNCTAD numbers are not consistent across years, e.g., the 2008 FDI figures are a little different when noted in the 2009 report vs the 2010 report, etc.
For 2017, UNCTAD estimates (January 2018) world FDI was $1520 billion, with China at $144 billion and India at $44 billion. That would put China at 9.5% of world FDI, and India at 2.9%. The "official" numbers should be published in a few weeks.
| Year | World ($ billion) | India ($ billion) | China ($billion) | India % of world | China % of world |
| 2016 | 1746.423 | 44.486 | 133.700 | 2.55 | 7.66 |
| 2015 | 1774.001 | 44.064 | 135.610 | 2.48 | 7.64 |
| 2014 | 1323.863 | 34.582 | 125.500 | 2.61 | 9.48 |
| 2013 | 1443.230 | 28.199 | 123.911 | 1.95 | 8.59 |
| 2012 | 1592.598 | 24.196 | 121.080 | 1.52 | 7.60 |
| 2011 | 1591.146 | 36.190 | 123.985 | 2.27 | 7.79 |
| 2010 | 1388.821 | 27.417 | 114.734 | 1.97 | 8.26 |
| 2009 | 1221.840 | 35.657 | 95.000 | 2.92 | 7.78 |
| 2008 | 1818.834 | 47.139 | 108.312 | 2.59 | 5.96 |
| 2007 | 2002.695 | 25.350 | 83.521 | 1.27 | 4.17 |
| 2006 | 1463.351 | 20.328 | 72.715 | 1.39 | 4.97 |
| 2005 | 982.593 | 7.622 | 72.406 | 0.78 | 7.37 |
| 2004 | 742.143 | 5.771 | 60.630 | 0.78 | 8.17 |
China attracts increasing amount of FDI in absolute terms, and a generally increasing share of world FDI, and yet the significance of the FDI for its economy, in terms of FDI as a fraction of GDP is declining. In India, the UPA government choked the golden goose, and the NDA government is reviving it; but the relevance of FDI to the Indian growth story is still much less than it was for China at an equivalent stage of development.
POSTSCRIPT:
While obvious, it bears pointing out that e.g., a national economy that is 0.5% of the world economy cannot be expected to get 5% of the world's FDI. So the best estimate (and probably the most difficult to accurately measure because of the cumulative issues, e.g., that lead to PPP estimates of GDP) of FDI attractiveness would be the ratio of the world's FDI to the size of the nation's economy relative to that of the world. A country with 0.5% of the world economy that attracted 0.5% of the world's FDI could be said to be holding its own, and underperforming if it attracted only 0.4% of the world's FDI.
This World Bank document gives for 2016, world GDP as $75871.742 billion, India as $2,263.792 billion and China as $11,199.145 billion. India is thus nominally 2.98% of the world economy and China is 14.76% of the world economy. So while both countries were growing faster than the world average in 2016, they were underperforming relative to FDI in the above sense. One has to ask, which are the countries that are overperforming relative to FDI; my guess, only a guess, would be Singapore is one.
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