SINGAPORE After years of debate, India s government recently announced that will open the country s retail sector to foreign investment.

Business can encounter significant barriers when striving to invest in foreign distribution (retail or wholesale) markets.

The informal retailing sector will have a role to play once markets are opened and formal retailing expands. FDI facilitates the switch from informal to formal retailing.

Since the Indian retail sector is still in its infancy, the opening to FDI needs to be gradual in order to give the domestic industry enough time to adjust.

The process of opening the retail sector in China began in 1992 when foreign investment was allowed in retailing on a trial basis.

Not all developing countries and LDCs that seek to attract foreign investment to develop their retail services sector are successful, since developing countries represent low value markets on average, and for FDI to come, sufficient volume of sales should be available.

After Sweden eased planning laws in its retail sector during the 1990 s, the country posted the strongest retail productivity growth in Europe (and outstripped that of the United States) between 1995 and 2005.

Retail sales in the Russian Federation totalled 194.6 billion in 2004, with the distribution sector's contribution to GDP amounting to 22 per cent.

As a result, China s retail sector seems more likely to follow a two stage development path, with e tailers emerging as the major national players.

Construction is booming, and foreign investment is surging.

The distribution sector includes commission agents, wholesalers and retailers who act as enablers of trade.

The retail sector is characterized by economies of scale and scope as well as vertical integration and the existence of large retail chains.

Regulation and regulatory issues emerge as the next frontier or opportunity for ensuring sustained growth in the retailing sector.

OECD countries still use diverging approaches to regulate the retailing sector, with countries such as Belgium and Spain imposing a large number of regulatory restrictions, and countries such as France, Japan, the United Kingdom and Turkey having relaxed a number of them.

The debate around opening the retail sector to foreign investment is currently being framed, on the one hand, by the need to modernize supply chains and, on the other hand, by the desire to protect small shopkeepers livelihoods.

Neither the economy in general, nor the retail sector in particular, should be adversely affected.

In the Colombian market large scale retailers coexist with SMEs, each one serving a different segment of the market.

The shift of FDI to services

Its share price might decline toward zero, but its retail customers will be blissfully unaware of its difficulties.

Online retail and supporting logistics is expanding in a wide range of advanced and developing economies. In China, where the expansion is occurring extremely quickly, estimates suggest that only part of the expansion is at the expense of traditional retail.

Online sales are less common in retail trade (B2C) or in services' industries, with sales accounting for only 1.7 and 1 per cent of total sales, respectively.

Of course, hypermarkets will do well in a few locations, but they are unlikely ever to dominate India s retail sector.

The retail sector is a huge source of inefficiency that effectively places a massive tax on India s poor by driving up prices.

A number of lessons can be drawn from the OECD experience in countries where regulations were less restrictive, structural changes in the retail sector have generally been easier to implement, employment has been higher and performance has improved.

Giving micro finance institutions access to national and regional payments systems and electronic retail facilities will go a long way toward meeting the requirements of the retail and business sector in terms of banking facilities.

In the retail sector, which employs a huge number of Japan s unskilled workers the so called mom and pop shops Japanese productivity is now 25 lower than in Western Europe.

Investment in agriculture in Africa must focus on creating a dynamic smallholder sector.

FDI is negligible in primary activities and low in manufacturing. An exception is Mexico, from which relatively more outward FDI has been in manufacturing.

The secretariat should also follow up on the work undertaken on FDI in services (e.g. by looking at the tourism industry, which is of special interest to developing countries), as most recently presented in the World Investment Report 2004.

Four fifths of the FDI stocks from developing countries were in services in 2002.

Moreover, continuing investment in real estate makes it all the more difficult to wean the economy off its real estate addiction, and the real estate market off its addiction to government support.

Distorted interest rates, official guarantees, and tax subsidies encourage continued investment in real estate, when what the economy needs is investment in, say, technology and clean energy.

The share of inward FDI in the distribution sector is relatively small as most investment is directed towards the oil and gas industry.

In both Korea and Japan, large firms entry into the service sector is impeded by restrictive regulation, for which small producers are an influential lobby. Regulation prevents wholesalers from branching downstream into retailing, and vice versa.

Investment in equipment the key to strengthening productive capital in the tradable goods sector has generally suffered even more.

Foreign direct investment will be allowed to enter the retail sector and civil aviation bold decisions that cost the government the support of a recalcitrant coalition ally.

The Euro Retailer Produce Working Group (EUREP) is a European based trade organization for retailers.

Since 2004, progress such as the modernisation of several buildings in the city centre and a proliferation of retail and housing developments in the suburbs are results of recent investment in the city by both the public and private sectors.

Even though the markets seem to be anticipating substantial levels of quantitative easing, US corporate investment remains subdued.

With the housing sector accounting for 10 of GDP and investment in real estate development accounting for 25 of total fixed investment, any decision to rein in runaway housing prices will be difficult.

To accelerate economic growth, the priority has been to stimulate investment and recovery in manufacturing, the sector that was hardest hit by the international crisis.

Nicaragua has introduced a national development plan that focuses on economic development through investment in the production sector and in the economic infrastructure.

Opponents point to how big retailers decimated the traditional retail segment in the West.

Increasingly, Russia s oil surpluses drive economic growth through rising investment, which boosts construction and consumption, in turn benefiting retail trade and finance.

Why would two women who were enjoying successful careers in investment banking in the corporate sector leave to found a financial services firm?