...1. Introduction Foreign Direct Investments (FDI) has been playing a critical role in the Sri Lankan economy since last four decades. Similar to many developing countries in the world, Sri Lanka also focuses on seeking and attracting FDI through many public policy measures due to many positive sides of FDI. FDI could be defined as an international investment made by a resident entity in one economy (Direct Investor) with the objective of establishing a long term interest in an enterprise (the direct investment enterprise) resident in another economy (N. Samarappuli& G.C.R. Tharanga, (2009). While bringing foreign capital into the country, FDI supports economic growth by transferring knowledge, technology, managerial skills and best practices and creating employment opportunities (Dharma de Silva, 2011). When considering the Sri Lankan context, with the termination of three-decades lasing civil war, Sri Lanka is moving itself towards a faster economic growth reaching the upper-middle income status. With these objectives, the importance of attracting FDI has become a high priority of the Government’s strategies. The Sri Lankan Government has been adopting very liberal FDI policy in order to encourage and attract foreign investors into the country. As per the report on “Recent Economic Developments” published by the Central Bank of Sri Lanka (CBSL), net FDI has increased to USD 368 million during the first six months of 2012, compared to USD 364 million during the corresponding...
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... No. 031 ANDREAS JOHNSON Host Country Effects of Foreign Direct Investment The Case of Developing and Transition Economies This thesis consists of four individual essays and an introductory chapter. While independent from each other, these essays share some common properties. They are all empirical and focus on the interaction between inflows of foreign direct investment (FDI) and host country characteristics. The primary focus of the thesis lies in how inflows of FDI affect developing and transition economies. Macro-level data are used in all essays. The first essay analyses the FDI inflows that the transition economies of Eastern Europe have attracted and tries to find determinants of these inflows. The following two essays compare the effect of FDI between developing and developed economies. The second essay studies the relationship between corruption in the host country and the volume of FDI inflows. The third essay explores the effect of FDI inflows on host country economic growth. The fourth and final essay analyses the relationship between FDI and trade, focusing on the link between FDI flows and host country exports in eight East Asian economies. ISSN 1403-0470 ISBN 91-89164-64-4 ANDREAS JOHNSON Host Country Effects of Foreign Direct Investment The Case of Developing and Transition Economies Jönköping International Business School P.O. Box 1026 SE-551 11 Jönköping Tel.: +46 36 10 10 00 E-mail: info@jibs.hj.se www.jibs.se Host country effects of foreign...
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...of FDI in Retail in India FDI in single brand retail was first introduced in 2006 and it was first in 2010 that the idea of FDI in multi-brand retail was proposed by the government as a step to boost the economy of the country. The Indian Retail industry is being seen as a concrete pillar to boost the economy. Currently the retail industry accounts to 14-15 % of the GDP and employs 6-7%of the total nation’s population. It is expected to reach 16-18% of the total market within the next five years. At the time when FDI in single brand retail was introduced in 2006 the limit was set to 49% ownership rights but in the fiscal year 2011-12 government of India agreed to reform its policy on the single brand retails and increased the ownership rights to 100%. Also in 2012, the Indian government allowed FDI in multi-brand retail in which the company has 51% ownership. Following are some of the points of proposed FDI in retail: * Minimum investment to be done is $100 million. * 50% of the investment should be done in improving the back end infrastructure. * 30% of all raw materials have to be procured from the small and medium enterprises ( this rule has been recently reformed as government has made exception for IKEA). * Permission to set retail stores only in cities with a minimum population of 10 lakhs. * Government has the first right to procure material from the farmers. Political Opposition: There was a staunch opposition to the introduction of FDI...
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...Introduction to Business Management BUSM 4151 Individual Assignment 2 * Executive Summary The aim of this report is to * Contents Executive Summary ii 1. Introduction 1 2. Aim 2 3. Issues 3 4. Conclusions 4 5. Recommendations 5 References i 1. Introduction Global vehicle sales in the start of 2013 have been soaring and have been at an all-time high since 2010 (Gomes 2013). This is greatly supported by the 30% increase in car sales in Asia (Gomes 2013). Colourful Corporation being a car manufacturing company would want to align our company vision of efficiency and profitability with the future prospects of expanding in Asia. Colourful Corporation has been approached by the Ford car manufacturing company to invest $200 million in one of its existing manufacturing plants in Asia as part of a consortium. This gives Colourful Corporation to further explore the prospects of the Foreign Direct Investment opportunity in Asia. * 1. Aim The aim of this report is to determine the vision, strategy and managerial issues in regards to a foreign direct investment (FDI) in Ford car manufacturing plant in Asia. This is Using theoretical framework and available resources, a research into the vision, strategy and managerial issues was conducted. In addition, research into how another Issues Foreign Direct Investment (FDI) Foreign direct investment (FDI) in Asia for Colourful Corporation in this case looks at the investment of existing...
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...Business | | Assignment question: There are several theories that seek to explain why FDI takes place. These theories try to explain why firms go to the trouble of acquiring or establishing operations abroad. Such theory includes Dunning’s Eclectic Paradigm, Vernon’s Life Cycle and Knickerbocker’s Model to name a few. Your academic paper should illustrate the use of such theories to evaluate the rationale for foreign direct investment for a leading player in your chosen industry. | | | | Student: Matteo Noris ID: 10224550 Course: (BA) International Business Assignment Due Date: 25th January 2012 Unit Tutor: Agnieszka Chidlow Matteo Noris ID: 10224550 Fundamentals of the International Business Submission Date: Wednesday 25th January 2012 Weighting: 30% of the total mark for the Unit * Chosen Assignment Question : 2 Foreign Direct Investment There are several theories that seek to explain why FDI takes place. These theories try to explain why firms go to the trouble of acquiring or establishing operations abroad. Such theories include Dunning’s Eclectic Paradigm, Vernon’s Life Cycle and Knickerbocker’s Model to name a few. Your academic paper should illustrate the use of such theories to evaluate the rationale for foreign direct investment for a leading player in your chosen industry. Contents Page Contents Page 2 Abstract 3 Introduction 3 Main Body 4 Conclusions 8 References 8 Appendices 9 - Appendix 1: 10 -...
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...Introduction While Cemex has a strong preference for acquisitions over starting fresh, this poses several key root problems for both Cemex and the host nations. Cemex had to face some challenging questions; What are the primary factors in why Cemex has chosen Direct Foreign Investments versus some alternatives; What is the impact of their choice in FDI on the host-country, as well as home-country. What are the primary factors in why Cemex has chosen Foreign Direct Investments versus some alternatives? There are several options to consider when a company wants to move into the international global market. The biggest questions firms usually ask is, “Why do firms go to all of the trouble of establishing operations abroad through foreign direct investments when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market?” (Hill, 2008). This question was undoubtedly debated heavily by Cemex prior to investing in foreign markets. One of the industry specific novelties of cement manufacturing, is the product itself. “The company sells ready-mixed cement that can survive for only about 90 minutes before solidifying, so precise delivery is important” (Hill, 2008). This industry is already at a predisposed peril if it were to consider exporting their goods. The cement industry requires this product to be made on site. Due to this requirement, Cemex could have considered Licensing, “Occures when a firm...
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...contents 1. Introduction 3 1.1. FDIs and Entry in China 3 1.2. Research Contribution 3 1.3. Research Method 3 2. Literature review 4 2.1. FDIs 4 2.2. Macro Environment 5 2.3. Timing of entry 6 3. Discussion 6 3.1. Introduction of Cases 6 3.2. Motives of Entering China 7 3.3. Joint Venture in China 8 4. Conclusion 9 4.1. Implications 9 4.2. Limitations 9 4.3. Research Outlook 9 5. References 9 1. Introduction 2.1. FDIs and Entry in China How should MNEs enter China? MNEs are usually presented with multiple entry choices, namely export, licensing agreements, franchising and FDIs. While each mode presents advantages and disadvantages, FDIs cause MNEs to make direct investments and be directly present in foreign countries, as opposed to indirect investments and presence through other modes of entry, hence the name “foreign direct investment”. But with direct presence in a foreign country MNEs are subject to both formal and informal institutions, and those institutions will directly influence a company’s decisions and it’s mode of entry (Ingram, Silverman 2002). MNEs have to decide whether to go as a first or late mover and due to what kind of motivation they decide to do FDIs in China. In countries with a weak institutional framework, Meyer et al. (2009) find that MNEs should choose the Joint Venture FDI mode of entry, or if local resources are not needed, Greenfield. While China holds many restrictions on FDIs, several industries...
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...Alimatou TRAORE Concept Application essay #1 International Trade- IBS390 Summer 2015 International Trade and Foreign Direct Investment Introduction 1. International Trade, what is it? 2. FDI : Definition and different types 3. Impacts of FDI( Foreign Direct Investment) on International Trade 4. Costs and Benefits of FDI( Foreign Direct Investment) Conclusion Introduction The world economy has developed over the past few decades in a great manner, regarding investment in particular and the way multinationals enterprises are now investing in the developing world to increase their production, assets, and interconnected market networks. Individuals everywhere in the world turn out to be closer than ever before. Goods and services available in one nation A will be instantly promoted in another country B or C. Universal exchange and communication became more basic. This current situation is called Globalization. Globalization is at the same time the primary cause and effect of the incredible growth of International Trade over the past decades. Thanks to International Trade, consumers around the world enjoy a wider range of products than they would if they only had access to domestically made products. 1. International Trade, what is it? International trade simply refers to the movement of goods and services across borders. This activity gives rise to a greater competition and more competitive pricing in the market. However let’s not...
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...Research Proposal Example 1 The influence of exchange rate volatility on Foreign Direct Investment (FDI) in Nigeria Word Count: 3253 Date: March 2012 Table of Contents Introduction ........................................................................................................................... 1 Aim and Objectives ............................................................................................................... 2 Significance and scope of the study ................................................................................... 3 Key Literature Review ........................................................................................................... 3 Key Words ......................................................................................................................... 3 Literature ........................................................................................................................... 3 Research Design ................................................................................................................... 5 Data Collection methods .................................................................................................... 6 Ethical Issues .................................................................................................................... 6 Research Plan ......................................................................................................................
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...emergence and evolution of multinational corporations from Hong Kong Introduction Although the origins of Hong Kong-based MNCs can be traced(ditelusuri) to the British colonial period and Hong Kong’s position as an entrepôt(gudang) for trade in South East Asia and China, indigenous (adat) Chinese firms(perusahaan) based in Hong Kong emerged(munculnya) as MNCs in the early 1950s, thus reflecting(mencerminkan) a longer history by comparison to MNCs from Taiwan and South Korea whose emergence(muncul) can be traced(ditelusuri) to the early 1960s. Hong Kong has grown to become a significant home country(negara asal) of FDI(foreign direct investment) with an outward FDI stock of ,$154.9 billion in 1998, or some 3.8 per cent of the global stock of outward FDI. Indeed, it had become the world’s tenth-largest source of FDI in that year based on the size of outward FDI stock after the United States (with a share of 24.1 per cent of the global stock of outward FDI), United Kingdom (12.1 per cent), Germany (9.5 per cent), Japan (7.2 per cent), the Netherlands (6.4 per cent), France (5.9 per cent), Switzerland (4.3 per cent), Italy (4.1 per cent) and Canada (3.8 per cent). In fact, Hong Kong is almost as important as Canada whose outward FDI stock was $156.6 billion in that year. Thus, Hong Kong had become a significant source of FDI in the world economy, particularly more so in relation to the stock of outward FDI from developing countries where Hong Kong is the single largest ...
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...MNC's Effect on Local Businesses in Retailing Sector (India) Contents Abstract 1 Introduction 2 Literature Review 2 Effect of MNC’s into Indian Retail Market 5 Advantages 5 Disadvantages 7 Hypothesis 8 Conceptual Model 8 Conclusion 10 References 10 Abstract Globalization paved the way for entrepreneurs to expand their wings beyond their respective counties. MNCs exploit the business opportunities in other countries based on the FDI policies in those countries. This has both advantages and disadvantages to the target country. The MNCs have their impact on the economy and people of countries in which they operate business. This paper focuses on the impact of MNCs on local businesses in retail sector in India. The report review existing literature which provides insights into FDI policies in India, the level of FDI allowed by Indian government with respect to single –brand and multi-brand foreign companies, the advantages, opportunities, risks, threats and disadvantages of allowing MNCs into retailing sector in India. Introduction Retailing is the business taking up by individuals or families in India. Generally mom and pop kind of businesses operate in retail sector. The retail sector has tremendous growth in India. Moreover retailing is a profitable business in India. Since India is the country with huge population, naturally it is the correct destination to foreign investors to get profits from the market. India has been traditionally depending...
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...Introduction Foreign Direct Investments (FDIs) have been found to be important aspects of economic development of host countries, and crucial, in building technological capabilities of local companies in developing countries. It is a channel for international diffusion of technology, having the potential to transfer technological, organizational and managerial practices to developing countries, which may, in the long run, lead to higher technological capabilities, and innovation, resulting in economic growth in these countries. For Tanzania specifically, FDI is a type of investment which is relatively infant as the government had opted for a socialist path of economic development from 1967 to around mid 1980s, following the Arusha Declaration. In mid 1980s, the government initiated and implemented deliberate economic liberalization policies. These resulted into the rise of FDI in Tanzania. For instance, FDI inflows increased from USD 2,418.7 million in 1999 to USD 3,776.6 million in 2001. Such investments were concentrated in the sectors of manufacturing (33.4%), mining and quarrying (28%) as well as agricultural (6.7%) (TIC, BoT and NBS, 2004: 23-24)4. 2.2 Foreign Direct Investment (FDI): Definition and Characteristics 2.2.1 Defining FDI Several FDI definitions have been given in the literature and these are more or less similar. A more representative definition of FDI is that by Rutherford (1992: 178; 1995: 178-179) who defines FDI as business investment in another...
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...Introduction While Cemex has a strong preference for acquisitions over starting fresh, this poses several key root problems for both Cemex and the host nations. Cemex had to face some challenging questions; What are the primary factors in why Cemex has chosen Direct Foreign Investments versus some alternatives; What is the impact of their choice in FDI on the host-country, as well as home-country. What are the primary factors in why Cemex has chosen Foreign Direct Investments versus some alternatives? There are several options to consider when a company wants to move into the international global market. The biggest questions firms usually ask is, “Why do firms go to all of the trouble of establishing operations abroad through foreign direct investments when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market?” (Hill, 2008). This question was undoubtedly debated heavily by Cemex prior to investing in foreign markets. One of the industry specific novelties of cement manufacturing, is the product itself. “The company sells ready-mixed cement that can survive for only about 90 minutes before solidifying, so precise delivery is important” (Hill, 2008). This industry is already at a predisposed peril if it were to consider exporting their goods. The cement industry requires this product to be made on site. Due to this requirement, Cemex could have considered Licensing, “Occures when a firm...
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...Table of Contents Chapter 1: INTRODUCTION 2 Chapter 2: THEORETICAL BASIS 3 Chapter 3: DATA COLLECTION 5 Chapter 4: EMPIRICAL MODEL AND HYPOTHESIS TESTS 7 Chapter 5: CONCLUSION 14 Chapter 1: INTRODUCTION Since the introduction of doi moi (renovation) economic reforms in 1986, Vietnam’s economy has been among the fastest growing economies in the region. Its economic structure reflected an increasing share of industry and services while the share of agriculture declined. Vietnam has been successful in poverty reduction strategies and has been able to ensure rapid growth with relative equity. Among the factors that led to this success, foreign direct investment (FDI) has played a crucial role, providing Vietnam’s economy with its relatively scarce factor, capital, and representing an extremely important instrument for integration in the world economy, especially at the regional level. However, FDI infusion in different localities is not identical. Therefore, this paper attempts to identify the main factors that help with the attraction of foreign direct investment capital in a locality of Vietnam. The survey results that there are some factors that have been evaluated as much more important; while, others are considered to be relatively less important in the current context of Vietnam. ...
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...Trade openness, Foreign Direct Investment in Southeast Asia 1 Introduction Over the last three decades, foreign direct investment (FDI) inflows have provided strong impetus for economic development across countries. FDI serves as an important source of supply funds for domestic investment thus, promoting capital formation in the host country (Omisakin et al.2009). DI inflows can assist an economy by giving opportunities orameliorating the level of service sector (i.e telecommunications, banking and finance, transport), wholesale and retail trade, business and legal services. During this period there have been different strands in the empirical and theoretical literature aimed at investigating the relationship between FDI inflows and their determinants in developed and developing markets. According to UNCTAD (2009), many developing countries, including the leastdeveloped ones, have attracted only small amounts of FDI inflows despite their efforts towards economic liberalization in an increasingly globalizing world. Moreover, FDI inflows are highly concentrated in a small number of countries. The demand-side of FDI theory argues that investment will go primarily to countries large enough to support the scale economies needed for production (Trevino and Mixon2004). For Grosse and Trevino (1996) this explanation helps to understand why most FDI is directed to developed rather than to developing countries, given that most investment historically has been marketseeking. Developing...
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