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FINANCE and investment have the natural tendency to flow from the areas where they are surplus to where they are deficit. But this natural law of the movement of these basic ingredients of growth notwithstanding, it is often found that some countries are getting more of those essential factors of development than others. As for example, if one focuses one's attention on the Asian theatre of growth, it will be found that at the moment China and India are the choicest destination of foreign investment from the richer and more advanced economies. But there are also other spots of growth in Asia where foreign investment is no less in demand. Why are the investing companies with their money and expertise giving less importance to those no-less-cash-hungry spots of growth?
Countries, particularly smaller-sized ones and with relatively lower per capita incomes like Bangladesh, have been trying for long to woo foreign investors with their cheaper labour, relaxed government rules and many other promises. But such countries have not yet succeeded much in really attracting foreign direct investment (FDI). They are now watching with awe and wonder how the owners of finance capital in the north are in a mad rush to reach the shores of China and India -- the two largest populated countries in Asia having also huge domestic markets. Are the governments of China and India then offering the prospective foreign investors such opportunities as other countries of Asia have not even dreamt of offering? In fact, the flow of foreign investment, especially that from the private sector, is determined more by the prospect of quick return to the investing companies than by the actual hunger for hard cash in a particular centre of growth. From the behaviour of the global private investors, one gets the unmistakable impression that the world is under the spell of the two afore-mentioned countries of Asia. As a matter of fact, there is more to learn than to be piqued at, from such behaviour of the overseas investors.
The psychology of an investor is understandly not guided by any altruistic motive. Countries such as Bangladesh, Burma, Laos, Nepal, Bhutan and the like are not still attractive to the foreign investors. Whatever the reasons for such a situation, such countries do nonetheless need to make every effort for providing the foreign investors with the credible signals about the safety of their investments as well as reasonable rates of returns on the same. Developed physical infrastructures, unhindered access to power and other utilities, a real business-friendly government policy, a less cumbersome administrative system, openness of the indigenous culture to foreign investment, level of use of English as the medium of business transaction, presence of a robust capital market, etc., are all important factors here. China and India, together, fulfil these criteria, though each may not at once score full marks when all the above-noted criteria are taken together. That is because, each is able to amply compensate for the shortage of some of the criteria with other still stronger features of their economies.
In this backdrop, it is imperative for the countries like Bangladesh and other less favoured economies of the region to put their own houses in order, to attract investments, both foreign and local, more aggressively than before. Perhaps, increased amounts of domestic investment will be more important for such countries at this stage to help create favourable conditions to facilitating inflow of FDIs. The focus should, therefore, be made on raising the level of domestic investments in a situation where successful businesses can help create and sustain the momentum for crowding in such investments, from both within and outside.
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