Why are some states in India able to manage foreign direct investment (FDI) better than other states by facilitating economic institutions? This book answers the question by examining the relationships between the state, society, and foreign capital in two select provincial states in India, namely, Tamil Nadu and Odisha. Not only at the central government but also in the two states, it was found that the ideas of key policymakers on the need for foreign capital as important financial resources critically influenced the institutional changes favouring FDI inflows in the process of industrial development. 1967 was a crucial turning point for Tamil Nadu and Odisha during which regional political parties won the state legislative assembly elections and had a chance to capitalise on citizenship politics. In both states, the financial difficulties of the 1970s helped state leaders consider foreign investments as significant financial resources. However, such ideas were implemented with a significant difference in the two states.
This book details the difference. It scrutinises the socio–political factors, such as ideas and interests of political actors in restructuring institutions that shaped the disparate levels of FDI inflows into the states. It emphasises the causal role of differing state–society relations in the evolution of institutions facilitating and regulating FDI inflows in the two states. It also aims to explain the dissimilar patterns of such institutional change at the union and state levels.
Sojin Shin researches and teaches at the Institute of South Asia Studies at the National University of Singapore. Her research focuses on the political economy of development in South Asia. As a comparative political scientist and area specialist, she is particularly interested in the puzzles of uneven economic and political development in the states of India and the dynamics of regional politics in South Asia. She is currently visiting Seoul National University’s Asia Center.