SEMINAR ON REDEFINING BUSINESS VISION :ISSUES AND CHALLENGES

St.Xavier’s College,Kolkata organized a UGC sponsored National Seminar on “Redefining Business Vision:Issues and Challenges” on 19March,2016 in collaboration with University of Calcutta and ICSSR.Fr.Dr.J.Felix Raj,S.J.,Principal of St.Xavier’s College inaugurated the seminar by lighting lamp and by welcoming address.The theme address was given by Prof.Swagata Sen-Pro-Vice Chancellor of Calcutta University.The theme of the Plenary session was “Strategies for Redefining Corporate vision-Issues and Challenges” where Prof.Kanika Chatterjee of Calcutta University addressed about Towards a Social License vision of global legitimacy.Mr.Chandra Shekhar Ghosh of Bandhan Bank said on how Bandhan Bank becomes a big giant of private bank in India where strategy and vision were the two pyramids.Prof.Sankarshan Basu  of IIM,Bangalore,threw light on Reinsurance.In the Pannel Discussion under the theme “Reshaping strategies for sustainable business vision” ,Prof.Banikanta Mishra of Xavier University,Bhubaneshwar,said about Corporate Social Responsibility,Prof.Peeyush Mehta of IIM,Kolkata,said on the sustainable business vision and its consequences,Prof.Pranabesh Roy,Xavier School of Management ,Jamsedpur addressed on Human Resource Management where how many years can be considered as sustainable business is to be judged was the central point of lecture.

There were 7 technical sessions on finance,accounting,marketing,and human resources comprising 51 papers.

I have presented a paper on “Financial crises and nexus between growth and foreign direct investment”.

The abstract of my paper is given below.

 Financial Crises and Nexus between Economic growth and Foreign Direct Investment

Dr.Debesh Bhowmik

 (Retired Principal and Associated with International Institute for Development Studies, Kolkata)

Email-debeshbhowmik@rediffmail.com

ABSTRACT

The objective of this paper is to study the relation between FDI and growth with multiple factors. Secondly, it exclusively explained the nature of FDI in the financial crises when growth declined. Ragimana(2012),Adelake(2014),Tintin(2012),Stehrer and Woerz(2009),Li and Liu(2005), Dinda(2009),Nair(2010) and many other studies have been incorporated to relate growth and FDI with other variables  for several countries including India. Data have been collected from the World Bank, Reserve Bank of India, UNCTAD for the year from 1990 to 2013.For co-integration and VAR analysis the models of Engle and Granger(1987) , Johansen (1991,1996) and Johansen and Juselius (1990) methodologies were used. Hansen and Doornik(1994) model was done to test of normality for residuals.

Taking GDP growth rate, degree of opennesss, total external debt, interest rate and exchange rate as the important determinants of FDI in India during 1990-2013, the paper verified that the Engle-Granger methodology showed that there is co-integrating relationship where degree of openness and interest rate are significant where as Johansen test proved that there are 5 cointegrating vectors  in the level series, 5 cointegrating vectors in the first difference series respectively. The VECM is verified and it was found that there are serial correlation and ARCH error with non-normal distribution where all roots lie inside the unit root circle including 5 unit roots but impulse response functions do not approach to zero and error correction terms and residual systems are explosive.

The paper also concludes that FDI does not cause Granger financial crises but financial crises do cause Granger FDI. In every financial crisis since 1890,FDI changes downward but in Euro crises and US subprime crises, FDI did not decline in most of the East Asian countries. The declining growth rate and flows of FDI in all financial crises were the general phenomenon. Also in India, financial crises had negative impact on FDI and growth.

The limitation is that there are  many determinants of FDI in the economy as suggested by existing literature available on this issue, namely,(i) Market Size(ii) Portfolio Diversification(iii) Resource Location(iv) Differential Rate of Return(v) Foreign Exchange Reserves(vi) Internationalization (vii) Openness(viii) Government Regulations(ix) Political Stability(x) Tax Policies(xi) Inflation (xii) Industrial Organization(xiii) The Level of External Indebtedness(xiv) Foreign Exchange Rate (xv) technology ,(xvi) human capital respectively. The choice variables depend on the needs of the economy.

More analysis can be done in the cases where FDI decline in every financial crisis regionally or sub-regionally. Even, why China and other East Asia did not react negatively too much in recent crises is to be an added future studies. Even, the relation among currency crisis, banking crisis and debt crisis with growth can be explained in a more detail manner in future studies in specific country.

Key words- Foreign Direct Investment, economic growth, financial crises, cointegration, VAR

JEL-C23,C33, F21,F01,O55