Foreign direct investments in the only unpenetrated highly populace market have proven effective in improving the U.S. economy. With Microsoft and Google investments, India curtailed poverty and encouraged economic growth.

Microsoft and Google Investments

Since 1990, Microsoft has invested in various operations in India, including Intelligent Cloud and Artificial Intelligence to facilitate the quick delivery of digital transformation. More recent operations in 2021 entail Microsoft’s collaboration with Invest India to support the build-up of 11 technological start-ups. In 2022, Microsoft led the largest India data center region investment worth Rs 15,000 crore across a 15-year period.

Since 2004, Google has also invested in India to enhance the country’s digital economy. The tech giant’s most contemporary investment announced is a $10 billion investment in 2020, known as the “Google for India Digitization Fund” to fuel the digitization of India. In 2022, Google also publicized support to Airtel, India’s second major telecommunications operator, in a $1 billion investment, according to the Economic Times.

Impact on Reducing Poverty in India

Today, Microsoft operates in 11 different Indian cities with around 16,000 employees. The International Data Corporation estimates that Microsoft’s data center region contributed to economic gains worth $9.5 billion from 2016-2020 and unlocked 1.5 million employment opportunities, The Times of India reported.

Tech start-up companies generated around $6.5 billion in the second quarter of 2021, according to Business Today. This is indicating improved economic growth and poverty reduction, especially as start-ups represent a significant aspect of economic development.

Following Google’s $10 billion investment in 2020, the number of employees it holds doubled from early 2020 to late 2021, and over the following two years, projections show that the workforce is likely to double. This underlines Google’s impact on promoting economic growth through the reduction of unemployment on the national level, declining by 4.2% from 2020-2021.

Human Development Index (HDI) value in India rose from 0.429 in 1990 to 0.645 in 2019. GDP growth improved from 3.8% in 2000 to 8.9% in 2021 and extreme poverty declined by 12.3 percentage points between 2011-2019. This illustrated the overall impact digital technology has on encouraging equality and financial inclusion across India.

Imports

In 2019, estimates have stated that Indian trade accounted for 2.3% of total U.S. imported goods, standing at a worth of $57.7 billion. A U.S. government report confirms that service products such as telecommunication and research and development accounted for a large proportion of such imports and in 2019 it stood at $29.7 billion.

Acknowledging the role of imports in relieving U.S. households from increased good prices, this highlights how high-tech investments in India Improved the U.S. economy. As evidence of the latter, a 2021 U.S. Chamber of Commerce report has highlighted that with imports, the typical American household uplifted its purchasing power by $18,000 per year, thereby equating to greater value for money.

Exports

In 2019, exports from the U.S. to India accounted for transactions valued at $34.3 billion, corresponding to 2% of total U.S. exports in that same year, and 2020 World Bank data shows that exports contributed to 10.16% of U.S. GDP. Agricultural products captured a considerable share of exports, totaling $1.8 billion in 2019, and each $1 billion from agricultural exports in 2019 required around 7,784 full-time U.S. employees. This illustrates eminent economic activity in terms of productivity, efficiency and employment domestically.

Importance of Microsoft and Google to the US Economy

The 2021-20 fiscal year illustrated economic gains for Microsoft (India) in terms of revenue growth valued at 7%. For the 2021 financial year, it is also estimated that Google’s revenue from India improved by 38% in terms of profit.

Such financial profits equate to greater corporate security and enhanced growth prospects and considering the impact both tech giants have on the U.S. economy this illustrates an unprecedented gain for improved economic growth via repatriated profits. For instance, Microsoft paid $13 billion in tax to the U.S. economy from its overall overseas operations. Similarly, Google in a 2018 announcement publicized its $38 billion payment in tax on its foreign cash and confirmed its intentions to offer 20,000 new employment opportunities. Knowing that India accounts for a large sum of both corporations’ overseas operations, this signifies the importance of investments in India to the U.S. economy.

In an era of globalization, economic gains in one country would demonstrate financial benefits in another. Efforts such as those of Microsoft and Google show how India can build a stronger infrastructure that strengthens its position in tackling poverty, while also highlighting how high-tech investments in India improved the U.S. economy.

–  Noor Al-Zubi
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