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AT Kearney's Confidence Index has India at third spot, up from sixth in 2003. A look at the results. First the good news on Foreign Direct Investment (FDI). India ranks an impressive third on AT Kearney's FDI Confidence Index for 2004, after chart-topper China and the ex-topper United States (these two have flipped ranks since 2003). India has vaulted past Poland, Mexico and Germany, which were ahead of India in 2003. The index is a measure of how attractive the country seems to global investors as an investment destination, and is based on a survey of big time decision makers. It assumes added significance because for the first time since October 2001, a majority of the surveyed respondents (in September 2004) reported having an optimistic outlook for the global economy. Some major source of tension has vanished, by the sound of it. Why is this significant? Because of the bad news. That the India-China 'actual inflow' gap is still staggering is, of course, a cause for some serious head scratching. But that's not the bad news being referred to (in any case, that could soon change). From a global perspective, the bad news is that the tailspin that FDI went into after peaking in 2000, is yet to be reversed. In fact, if there's any graph that puts serious worry-wrinkles on the forehead of Paul A. Laudicina, vice-president AT Kearney and Managing Director of its Global Business Policy Council, it is that of global FDI flows. In 2000, the figure scaled $1.4 trillion. In 2003, it was down to a pitiable $565 billion. On this evidence, 'globalisation' (by way of capital flows) has gone into reverse. Remember, though, that there is always a lag between reported optimism (September 2004 is not very long back) and an actual change in the way things move. So: will 2005 be the year of the big global FDI turnaround? Among 'global developments most likely to influence FDI decisions', the AT Kearney survey lists 'recovery of the US economy' on top, followed by 'dollar volatility' and 'overheating of China's economy'. 'Security concerns and terrorism' is seventh in order on the list, followed by 'rising interest rates', 'volatility of energy prices' and 'military conflict in the middle east'. That, though, is hardly enough to draw any conclusions, given how dynamic---and unpredictable (think tsunami)---the world mostly is. But then again, FDI flows, unlike butterfly wing flaps, are meant to be a wholly manmade phenomenon, so maybe it should not be so hard to call the trend for the year. It is, like it or not. Which goes to make the point that while 2004 may have seen some easing of FDI-stanching factors (and India's jump in the rankings should materialise into hard money over 2005 and subsequent years), the world isn't quite back to normal yet, and from the sound of noises across the globe, may not be for awhile yet---in spite of the fervent hopes of the world's liberal globalists.
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