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GTAP Resource #3943

"Liberalization of FDI in Retail Services: A Fast Death Instrument for India?"
by Lakatos, Csilla and Tani Fukui

In order to address the significant increase in importance of FDI and of FDI-related policies, we develop an extended GTAP model and associated global database that accounts for both foreign direct investment and multinational companies differentiated by the region of ownership. The model is calibrated on the GTAP v8 database complemented with global foreign affiliate statistics data described in detail in Fukui and Lakatos (2012) and the FDI stocks data (Gouel, Guimbard and Laborde, 2011). To illustrate the model's behavior, we examine the recent policy debate in India with respect to retail services. As a result of intense pressure from different stakeholders, the Indian government has recently suspended its decision to allow foreign direct investment in the retail services sector in India. On the one hand, allowing foreign retailers such as Walmart, Carrefour or Tesco is seen to threaten the existence of millions of small traditional stores and street vendors that dominate the Indian retailing industry. On the other hand, corporate retailers can lower prices for Indian consumers by improving the efficiency of the retail services industry while bringing investment and know-how. Barriers to FDI in retail services have been estimated by the authors and are modeled as output tax equivalents.

Resource Details (Export Citation) GTAP Keywords
Category: 2012 Conference Paper
Status: Published
By/In: Presented at the 15th Annual Conference on Global Economic Analysis, Geneva, Switzerland
Date: 2012
Created: Lakatos, C. (4/30/2012)
Updated: Lakatos, C. (6/21/2012)
Visits: 2,583
No keywords have been specified.

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