1. The Impact of FDI on the Poor by Nita Rudra and Siddharth Joshi
Discussion by James Raymond Vreeland
Georgetown University
Globalization and the Politics of Poverty and Inequality Conference
January 4-6, 2011

3. Plan “Production of knowledge” GDP/capita as a measure of welfare
FDI & the poor

4. 1) The “production of knowledge”
How a paper becomes a publication
( )

5. How does an idea get into your textbooks?
Get an idea, write a paper
Present the paper
Share informally with colleagues
Present at conferences (small & large)
Revise, revise, revise
Send to a journal – 3 anonymous reviewers
Reject
return to step III, send to a new journal
Revise & Resubmit
return to step III, resubmit
Accept
polish, return to step I
Time to publication? – Lim paper: March 2010 – January 2013
Time to a book? – ,
Time to a textbook?...

6. 2) GDP/capita as a measure of welfare

7. GDP/capita as a measure of welfare
Drawbacks
Ignores income distribution
Ignores other factors:
Health
Education
Freedom
Others?
Advantages
Easier to measure than distribution
Highly correlated with many other factors we care about

8. How to measure GDP/capita
Exchange rate (“real”)
Purchasing Power Parity (PPP)
Compare ranking:

9. 3) FDI and the poor https://gushare. georgetown

10. Contributions
Paper shows how economic development can be bad for the poor
FDI increases local competition for scarce resources
FDI is bad for the poor - lowers access to clean water
Especially if there is high income inequality
Methods:
Case study
Panel study of India
Country cross-section
PLUS:
Creative ways of measuring the dependent variable
The IPE of ADD
FDI   (p31)

11. http://www. offsetwarehouse. com/about-us/why-buy-eco-textiles

12. My main question: Why is this a story of FOREIGN investment?
Note: insignificant effect of economic growth suggests FDI is special
Test for INVESTMENT in general?

13. Mechanism: inequality or institutions?
At times in the paper:
“institutional environment”
But democracy is not significant
Story seems to be:
Governments respond to pressure groups REGARDLESS of institutional environment
If the middle class is strong, water is protected
With high income inequality, owners of capital prevail and water quality declines for the poor
Democracy/dictatorship does not matter
In terms of our class: Is it interests and/or institutions?

14. Are there further connections between FDI and income inequality?
Does FDI go to places with more income inequality?
Does FDI cause income inequality?
What might be the implications of these questions for the Rudra & Joshi study?

15. Net impact of FDI on the poor?
FDI may raise
Income
Tax base
FDI lowers access to water
So, what is the net impact on the poor?

16. Take aways:
How an idea becomes a paper, becomes a publication, becomes “knowledge”
How to measure social welfare – pros and cons of GDP/capita
PPP
How FDI can hurt the poor (uses up their water!)
“Progress” can leave the poor behind… even making them worse-off

17. Thank you

18. Quick methods suggestion
Fixed effects in a cross-section:
y(i,t)= a(i) + b’x(i,t) + e(i,t)
y(i,t-1)= a(i) + b’x(i,t-1) + e(i,t-1)
Δy(i)= b’ Δx(i) + Δe(i)