A Co-Relation between Mass Media Communication and Foreign Investments in India

Abstract

Background and Purpose: India opened its doors to globalization in 1991 and the reference point of this change through globalization has been the United States of America (USA) which champions the cause of a free economy. The current study attempts to explore the relevance and importance that globalization has brought to India through mapping the shifting pattern of mass media coverage of India by the foreign media and parallely marking the shifting patterns in investments made by foreign financial institutions in India, over the last decade and a half.

Design/Methodology/Approach: Top 25 news articles about India reported by The New York Times (NYT), every year, over a span two decades 1991-2010 was taken from the NYT website. The 500 news reports were filtered and news falling in the category of Business and Personal Finance (BPF) were used for content analysis and categorised into three broad types – good; bad or neutral.

Similarly the investments made by foreign institutions (FII) in India were noted over the same period to explore a correlation between the BPF media reports and the investments made by FII in India. Since media reports do not often have an immediate impact a lag effect of one year was checked. The data was statistically validated.

Findings: The findings indicate an exponential rise in the number of news items which NYT carried about India over a period of two decades. There has been a change in the category of news coverage from ‘Arts and Culture’ to ‘Politics and Business’. The type of news report has changed from neutral to positive and the news reporting is more visually aided with photographs and pictures. A similar pattern is noticed in the foreign investments by institutions which have grown over a period of time. This clearly indicates the existence of a relationship between the positive news coverage by independent media and a rise in the amount of investments made by foreign institutions.

Research Limitations/implications: The study is limited to establishing a relationship between the media representation and investments by foreign institutions but the direction and the intensity of the relationship is not established. A lag effect on one year has been considered.

Originality/ Value: Observations and comments about India’s changing position as a potential economic power and a positive prospect for investments have been made which is empirically validated by the study. The study also brings out one of the factors which positively impact investments in a developing nation like India.

Keywords: India; Investments by Foreign Institutions; Shift in Communication quality and quantity; Globalization