Overcoming liability of foreignness

A growing number of Chinese and Indian firms have become sufficiently competitive to become important players in the global market for foreign direct investment (FDI).

Their FDI outflows have risen substantially during the past decade. Even during the recent economic crisis, when world FDI outflows dropped by 50 percent, China's outflows did not decline. In fact, in 2010, Chinese mainland's $68 billion of FDI outflows (more than the average world FDI flows during the first half of the 1980s) made it the world's fourth largest outward investor.

India's OFDI flows have also grown, but, with $13 billion, are far below China's, and they were negatively affected and delayed by the crisis.