Particularly, economic development is not a simple notion, which has often been limited to economic progress of a country in terms of its GDP; however, analysis (Borensztein & Lee, 1995, pp. 115-124) has indicated that economic development revolves around economic, as well as social advancement of a country that often does not allow quantitative analysis. Thus, experts usually overlook aspects, such as social justice, political freedom, etc that directly or indirectly results in enhancement of standard of lifestyles of country’s population. One can understand this relationship of FDI with economic development of a country by considering evidence (Borensztein & Lee, 1995, pp.
117-131) that shows that countries with higher rate of economic growth are more likely to develop rapidly in the sectors of education and health resulting in progression in the political system, and subsequently, allocation of wealth and rights. In this regard, while one cannot quantify the relationship of economic growth and social development, it is evident that economic growth creates a positive environment for social progress, and this relationship analysis gives an idea of the role of multinational enterprises through their foreign direct investment in economic development that is holistic development of a country. In order to exemplify understanding of the above relationship, this section of the paper will include efforts of the research to analyse the role of multinational enterprises that they have been playing by contributing towards technological development in industrial sector of India.
Although globalisation (Barnes & Kaplinsky, 2000, n. p) has resulted in an overflow of knowledge and information, developing countries, such as South Africa, India, etc are now depending heavily on their local small and medium enterprises that have now the responsibility to make efficient use of the available knowledge, particularly technology from the international market (Athreye & Kapur, 2001, 399-424).
At the same time, while movements of liberalisation and privatisation (Ahluwalia et al, 1996) have opened avenues for multinational enterprises to enter into the domestic markets of India for dissemination of technological advancements to SMEs, it has affected the Indian local market, which creates concern regarding the role of multinational enterprises in host countries, and India in this paper’s case. Moreover, while local markets in India
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