Fdi Foreign Direct Investment

In: Business and Management

Submitted By ReubenG
Words 1117
Pages 5
Manchester Metropolitan Business School
2012/13 Academic Year
Unit: International Business Theory and Practice (5Q5Z0047)
Unit Leader Dr Sougand Golesorkhi


Submission Date: Wednesday 23th January 2013
Weighting: 40% of the total mark for the Unit
Form: The assignment should be prepared in the style of a formal Academic Paper
Structure of the Academic Paper
This is to summarise and highlight the main findings that include an evaluation of main points and suggestions of better alternatives, recommendations, policy and/or managerial implications.
Theoretical background
This section should contain an introduction, and a focused literature review relating to relevant themes and topics. It should also establish the theoretical framework in which the paper is situated.
Empirical evidence and data analysis
This section should start to develop the arguments that you wish to make. It will present and draw upon relevant case study materials and other appropriate forms of evidence and commentary. Data should support your arguments and highlight examples of theory in real-world practice. You should aim to explain the relevance (to the subject area and your line of argument) of any examples deployed.
Interpretation and discussion
This section provides an opportunity for you to expand upon your argument by analyzing and interpreting relevant data, evidence and commentary. Here you should compare various competing strands of argumentation (where relevant), and provide a structured, evidence-based discussion of your thoughts and findings with respect to the topic at hand. This section should also include short concluding remarks – refer back to the question and focus on (a) how you have addressed this, and (b) the main points and messages that emerge from your work
All references should be complete and should…...

Similar Documents

Foreign Direct Investment

...Table of Contents 1. Introduction to the study 2 2. Literature review 2 2.1 Main concepts 2 2.1.1 Foreign direct investment 2 2.1.2 Economic development 3 2.2 Related literature: The role of FDI in economic development 3 2.2.1 The radical view of FDI 3 2.2.2 The positive view of FDI impact 4 2.3 The impact of economic development 5 3. Case of study: the impact of FDI in garment industry and automobile industry in Viet Nam 7 3.1 Overview of FDI in Vietnam 7 3.2 Garment industry 8 3.3 Tourism Industry 9 3.4 Assess the impact of FDI in Vietnamese economic development 10 4. Conclusion 11 References 14 Appendices 17 1. Introduction to the study Foreign direct investment (FDI) is a concept that has emerged in recent decades. It was born with the trend of globalization and become an interesting topic for economic researchers. The evidence is that there are a large number of studies on this field, including case studies in specific country and cross-country analyses, single-dimensional and multi-dimensional studies, examinations in single-sector and multi-sector. However, until now there are still some debates about the issues related to this concept. One of the noticeable discussions is the relationship between foreign direct investment and economic development. This paper, to some extent, will review these studies about the relationship...

Words: 3815 - Pages: 16

Foreign Direct Investment

...Foreign Direct Investment by Spain’s Telefonica Foreign Direct Investment takes place when a company invests its capital in new facilities in a foreign country. FDI is growing rapidly in the global market since it involves less risks compared to world trade and world output.  Spain's Telefonica provides a good example Foreign Direct Investment and how it has been growing in the global market. Telefonica was established in the 1920s when it was a state-owned monopoly in Spain.  In 1990s, when the government stopped deregulating the telecommunications industry, Telefonica rapidly changed and started to working towards growth by adopting new technology, reducing employees, and increasing profits and shareholders. One of the biggest steps Telefonica took was to invest in the telecommunications industry in Latin America since the region itself was starting to be deregulated and independent from the government. Even though Latin America shares many of the cultural value with Spain, Telefonica decided the merge or acquire facilities in the region. Telefonica chose acquisition as a way to enter Latin America instead of greenfield investment because greenfield investment involves opening a whole new facility and starting a company from scratch. Merging with an established facility is easier to manage by adding new technology and improving the management. The company invested a total of 11 billion in different countries in Latin America and became one of the biggest monopolies...

Words: 516 - Pages: 3

Fdi Foreign Direct Investment

... argumentation (where relevant), and provide a structured, evidence-based discussion of your thoughts and findings with respect to the topic at hand. This section should also include short concluding remarks – refer back to the question and focus on (a) how you have addressed this, and (b) the main points and messages that emerge from your work References All references should be complete and should follow standard academic conventions (i.e., Harvard system). See the examples below: Egelhoff, W. G. (1991). Information-processing theory and the multinational enterprise. Journal of International Business Studies, 22(3), 341–368. Rugman, A. M. (1981). Inside the multinationals: The economics of internal markets. New York: Columbia University Press. Presentation: The academic paper may be prepared individually or submitted as a group paper (no more than 2 contributors per project) Length: 2000 words for an individual submission and 3000 for a group submission (the word count excludes appendices and bibliography). The word count should appear at the end of the paper. An abstract of maximum 100 words required. Please pay attention to the learning outcomes (stated in your programme outline) in preparation for your academic paper. Marking criteria (see Grade Descriptors below) Select ONE issue from the following topics: 1. Foreign Direct Investment There are several theories that seek to explain why FDI takes place. These theories try to explain why firms go......

Words: 1117 - Pages: 5

Foreign Direct Investment

... competitive advantage over others. (Morgan, 1997). This is relevant even in today’s market, for example a firm ‘x’ decreases the cost of its manufacture then opponent firms like ‘y’ and ‘z’ will do the same in order to maintain their position in the market. The limitation of Knickerbocker’s theory is that it falls short of explaining why the first firm takes the initial step before the others do. The reason could be due to counteract ant technology or manufacture adversity. The internationalization theory’s accession therefore seems to be the most viable theory of FDI. In practice, the internationalization theory relates to our modern world today as multinational organizations are competing with each other on manufacture permutation and technological enhancement. These organizations are of the idea of surpassing or transcending their opponents and escalating their business in the market in the different industries, which they are situated in. References Robin J, Gilles L. G. , Cox H (1997) London [u.a.] Thomson, 1998. Morgan E. R. , Katsikeas S. C. (1997) Theories of international trade, foreign direct investment and firm internationalization: a critique. Retrieved on February 2, 2013 from: http://www.st-andrews.ac.uk/business/distance/Economics/Reading/Critique_trade_theories.pdf...

Words: 419 - Pages: 2

Foreign Direct Investment

... country. This purchase does little to help the home country of the business being bought. A foreign business buys a company in another country to obtain assets, distribution, and other strategic resources. With a cross-border acquisition, a home country gains little knowledge or technology from the foreign company. Green-field investments require money, technology, and new facilities brought to the home country by the foreign company (Klimek, 2011). This type of investment brings new products, jobs, and knowledge to the home country. In modern times, countries like China, have been taking full advantage of these investments. These benefits are the reasons why home countries prefer green-field investments over cross-border acquisitions. They bring things to the home country that they do not have and want. It helps home countries obtain technology and products that they do not have. Greenfield investments allow home countries to have a say in how foreign countries use their resources and markets. Incorporating political risk When companies look at foreign countries for green-field type investments, there is always a chance that the home country will retaliate against a FDI due to political tensions between the home country and the country of the foreign investor. Companies that make foreign direct investments are always taking some amount of risk by doing business in a foreign country. Outsiders are not always welcomed. When political conditions become...

Words: 1245 - Pages: 5

Foreign Direct Investment

...Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans".[1] In a narrow sense, foreign direct investment refers just to building new facilities. The numerical FDI figures based on varied definitions are not easily comparable.  FDI is the sum of equity capital, other long-term capital, and short-term capital as shown the balance of payments. FDI usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward and outward, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares.[3] FDI is one example ofinternational factor movements Importance and barriers to FDI[edit] The rapid growth of world population since 1950 has occurred mostly in developing countries[citation needed]. This growth has been matched by more rapid...

Words: 1892 - Pages: 8

Foreign Direct Investment

...FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF PAKISTAN CONFIDENTIALITY STATEMENT This dissertation has been agreed as confidential between the students, university and sponsoring organisation. This agreement runs for two years from (20 August 2008) STATEMENT OF AUTHENTICITY I have read the University Regulations relating to plagiarism and certify that this dissertation is all my own work and do not contain any unacknowledged work from other sources. WORD COUNT: 16,808 ABSTRACT 07000441 FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF PAKISTAN Keywords: FDI, Entry Modes, Determinants, Risks, Pakistan Telecom Abstract Pakistan telecom sector has attracted large inflow of foreign direct investment in recent years. Government policy of deregulation and privatization has created an environment conducive for foreign direct investment in telecom sector of Pakistan. This paper will investigate all those factors which have contributed in attracting the foreign direct investment in telecom sector of Pakistan. However, there are some risks associated with the foreign direct investment in telecom sector due to the current political instability and terrorism in the country. This paper will examine the risks associated with the foreign direct investment in telecom sector of Pakistan. Subsequently it will explore entry strategy for foreign companies to enter in Pakistan telecom market. FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF PAKISTAN...

Words: 19472 - Pages: 78

Foreign Direct Investment

...IRJC International Journal of Marketing, Financial Services & Management Research Vol.1 Issue 8, August 2012, ISSN 2277 3622 FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN INDIA R. ANITHA* *Assistant Professor, Anna Adarsh College for Women, Chennai, Tamil Nadu, India. ABSTRACT Foreign Direct Investment (FDI) plays a very important role in the development of the nation. It is very much vital in the case of underdeveloped and developing countries. A typical characteristic of these developing and underdeveloped economies is the fact that these economies do not have the needed level of savings and income in order to meet the required level of investment needed to sustain the growth of the economy. In such cases, foreign direct investment plays an important role of bridging the gap between the available resources or funds and the required resources or funds. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. In India, FDI is considered as a developmental tool, which helps in achieving self-reliance in various sectors and in overall development of the economy. India after liberalizing and globalizing the economy to the outside world in 1991, there was a massive increase in the flow of foreign direct investment. This paper analyses...

Words: 6831 - Pages: 28

Foreign Direct Investment

...Introduction of Foreign Direct Investment Foreign Direct Investment (FDI) is known as the long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. In other words, foreign direct investment is the cross-border corporate governance mechanism through which a company gains productive assets in another country. FDI is different from other major forms of foreign investment in that it is motivated largely by the long-term profit prospects in production activities that investor directly control (Wong, 2005). Wong also says that almost most of the developing and least developed countries worldwide equally participated in the process of direct investment activities. Over a long period of time, foreign direct investment (FDI) forms a major part of investment in most industrial and some developing countries. Besides that, he did explain that some FDI is intended to utilize local natural resources. Sometimes it is to employ relatively cheap labour, and sometimes to produce goods near to markets. Moreover, foreign direct investment can be a significant driver of development in poor nations. According to Katerina, John and Athanasios (2004), it provides an inflow of foreign capital and funds, in addition to an increase in the transfer of skills, technology, and job opportunities. Furthermore, they said it would be difficult to generate this capital through domestic savings, and even if it...

Words: 4064 - Pages: 17

Foreign Direct Investment

...FOREIGN DIRECT INVESTMENT – LOCATION ATTRACTIVENESS FOR RETAILING FIRMS IN THE EUROPEAN UNION1 Pervez N. Ghauri Manchester School of Management, UMIST United Kingdom Email: Pervez.Ghauri@umist.ac.uk Ulf Elg Dep. of Business Administration, School of Economics and Mgmt, Lund University, Sweden Email: ulf.elg@fek.lu.se Rudolf R. Sinkovics Manchester School of Management, UMIST United Kingdom Email: Rudolf.Sinkovics@umist.ac.uk 1 The authors would like to thank Handelsbanken’s Research Foundations for financial support. FOREIGN DIRECT INVESTMENT – LOCATION ATTRACTIVENESS FOR RETAILING FIRMS IN THE EUROPEAN UNION Abstract For politicians and country representatives it is becoming more and more important to look into ways to attract Foreign Direct Investments (FDI). Not only are successful location decisions of multinational companies good news for surviving in the political system, but related economic and social development implications necessitate a more comprehensive view on whether there is a race to attract FDI in Europe. And if so, what are its implications on different industries and societies within the EU. This paper focuses on the retailing industry and mandates an understanding of managerial decision making: Why do retailing companies enter particular country markets and what are the factors that determine a country’s attractiveness? A conceptual model is developed to understand the factors, corporate as well as market characteristics, which influence...

Words: 9518 - Pages: 39

Foreign Direct Investment

...3- Foreign Direct Investment   Background There has been a tremendous growth in foreign or international investment since 1990s. The underlying reasons for such international flows of capital can be attributed to several factors. International investment, for example, allows capital to find the highest rate of return, helps the owner of capital to diversify his or her lending and therefore reduces the associated risk, contributes to further development and spread of best practices in corporate governance and accounting rules, and finally it prevents the government from pursuing poor policies. The aforementioned advantages of the free flow of capital across national borders can be realized through two primary kinds of international investment: (1) Foreign Portfolio Investment (FPI) and (2) Foreign Direct Investment (FDI). While FPI is defined as investment in a portfolio of foreign securities such as stocks and bonds, it does not entail the active management of foreign assets. In other words, FPI is “foreign indirect investment” in that it represents passive holdings of foreign securities not least because the investor does not have control over the securities’ issuer. Exchange rates, interest rates, and tax rates on interest or dividends are factors that directly impact on FPI. In contrast, foreign direct investment, commonly known as FDI, refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the...

Words: 2791 - Pages: 12

Foreign Direct Investment

...FDI – A Foreign direct investment (FDI) is a controlling ownership in a business enterprise in one country by an entity based in another country. Foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations. Investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country. India is the third most attractive foreign directinvestment destination in the world. Types—  Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.[4]  Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country.  Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.[4 Mauritius, Singapore, US and UK were among the leading sources of FDI. Why countries seek FDI? Domestic capital is inadequate for purpose of economic growth; Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development; Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge. A...

Words: 1010 - Pages: 5

Foreign Direct Investment

...Foreign Direct Investment (FDI): Funds invested by an MNC and one nation for starting, acquiring, or expanding an enterprise in another nation. Three reasons corporations make foreign direct investments: To seek access to new markets To grow beyond a small domestic market To achieve cost and other competitive advantages over competitors Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased. The Organization of Economic Cooperation and Development (OECD) defines control as owning 10% or more of the business. Businesses that make foreign direct investments are often called multinational corporations (MNCs) or multinational enterprises (MNEs). A MNE may make a direct investment by creating a new foreign enterprise, which is called a greenfield investment, or by the acquisition of a foreign firm, either called an acquisition or brownfield investment. Green-field investments occur when a parent company begins a new venture by constructing new facilities in a country outside of where the company is headquartered.  There are several reasons why a company opts to build its own new facility rather than purchase or lease an existing one. The...

Words: 805 - Pages: 4

Indonesia Foreign Direct Investment

...According to the Indonesia Investment Coordinating Board, in the first half of 2015 capital expenditure on greenfield projects by foreign companies rose by some 62% year on year. In addition, in the last couple months, the government has launched six investment reform packages to ease the path for foreign investors looking to enter the Indonesian market, includes a new tax holiday scheme and plans for significant deregulation of key industries such as manufacturing, trade and agriculture. However, there are several remaining barriers that can be challenges both in the short term and long term foreign investment. First, regulations and policies. A lot of foreign investors worry about the length of time and the number of agencies that they have to deal with to obtain the necessary business permits/licenses. There are also many regulations that foreign investors are not necessary. Such complaints contributed negative perception to Indonesia investment environment. Second, the central bank’s decision to ban foreign currency transactions as of July 2015 makes companies’ financial planning more complicated. The central bank is prohibiting foreign currencies from being used in domestic transaction, including US dollar, to prevent Rupiah from depreciating. In addition to two reasons above, foreign investors also concern about worker productivity that is not keeping up with wage growth. Indonesia wage growth might be the fastest in Asia (12% per year), but productivity only......

Words: 278 - Pages: 2

Foreign Direct Investment

... global market is further helped by the fact that policy regime of Bangladesh for foreign direct investment by far the best in South Asia. GSP Facility Most Bangladeshi products enjoy complete duty and quota free access to EU, Japan, Australia and most of the developed countries and quota regime to USA had been ended on 1st January 2005. However, despite quota phase out, Bangladesh apparel has successfully taken up a better position in US market and experiencing substantial growth. Cost of Business Overall cost of doing business in the country is fairly competitive in the global standard. Sustainable Competitive Sectors: Considering the strength of Bangladesh either in the form of offering substantial resource advantages or low-cost, skilled manpower and global market demand, foreign investors are getting opportunities from textile, Electronics, Information Technology, Natural Gas-based Industries, Frozen Foods, Leather, Ceramic, Light Engineering and Agro based Industry. Bilateral Investment Agreements (12) The Foreign Private Investment (Promotion and Protection) Act 1980 includes a guarantee of fair and equitable treatment to foreign private investment. Such national treatment is also provided in bilateral investment treaties (BITs) for the promotion and protection of foreign investment. Present investment situation in Bangladesh Present FDI status in Bangladesh: As a developing country, Bangladesh needs FDI for its ongoing development...

Words: 5133 - Pages: 21