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Aug
24

DOES POLITICAL INSTABILITY AFFECT ECONOMIC GROWTH? POLITICS AND LOCAL ECONOMIC GROWTH: EVIDENCE FROM INDIA

 

Politics on the global platform have changed with time and with the change in power there has been always shifting economy as the business pattern keeps on integrating new changes as per suited at local level. Since politics plays a vital role in shaping economy of the nation which further boosts the business strategy accordingly, the explanation can be driven out of the product life cycle pattern of a product. The developed nations have strong political and economic presence, thus leads the way with product innovation which further keep on changing after the various phases of product. Thus the business patterns also changes along the due course of product among the developed, developing and under-developed nations.
As the world has globalized to huge extent political regime at different level has its own implication towards the financial globalization. Nation such as India where the financial globalization has played more of destabilizing role in recent times, the Foreign Institutional Investment i.e.; FII has traded in a way that they have exacerbated the domestic crisis by withdrawing huge scale of money. So we can also observe the asymmetric pattern with changing responses during the good and bad phase of nation’s political and economic situation. So the query arises does these foreign investors pull out capital on large scale and further acts as a vector of crisis.
The current issues related to Wal-Mart India operation showed their problems in progression of the business as they were facing at various juncture. The pull out of steel project amounted $5.3 billion at Karnataka by the POSCO was a big damage as far as strategic growth of nation is concerned. It will create wrong impression for foreign investment either in FII or the FDI. The implication was the news of other pull out this time around the steel giant Arcelor Mittal from Odisha amounting 50,000 crore rupees. Thus the implication of politics can lead to such great problems for the country. Again the remark of Noble Laureate Amartya Sen regarding his thought that the projection of PM candidate from NDA Mr. Narendra Modi not be secular in approach raises concern for him for the minorities in India. The upcoming election to be held in next year creates vagueness in the mind of business investors in India.