Wednesday, November 01, 2006

Double Standards For Acquisition And FDI

After globalisation has broken all national and regional barriers, the world, today, has been reduced to a global village. Acquisitions and FDI flows from one part of the globe to the other are now so routine that nobody raises eyebrows even when a developing economy springs a surprise of investing in a developed economy or goes for acquisitions.
Tatas has made recently mega acquisition of Corus in Europe for $8.3 billion besides other Indian foreign acquisitions of nearly $10 billion made in last 5 years. Of course starting from scratch, this is considered sizable even though it is just 1 % of global cross-border deals.
I found a report published in Times of India on a survey titled 'Voice of the People,2006' conducted by Gallup International and TNS intriguing as some findings reveal how people from different parts of the world view differently the whole business of acquisitions and FDIs. I do not know why 44% of the respondents in USA responded negatively to FDI flows to their country when it is the largest investor all over the world. Similarly, the respondents from developing economies - South Africa (71%), Nigeria (76%), Vietnam (75%) surprisingly supported the globalisation.
When MNCs were trying to get a foothold in India in 1970s, Left and socialist parties had given a battle cry against them. Now that Indian MNCs are spreading wings abroad, the voice of opposition seems to have died down. Ironically, it is the turn of the Indian MNCs of defending their acquisitions abroad with promises that there would not be any job cuts after the takeovers.I think no nation can get away with double standards for acquisitions and FDIs. If it goes for acquisitions abroad and invests in other foreign countries, it is only fair that it allows others to do likewise in its homeland.
You cannot have the cake and eat it too!

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