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Group 8. part a

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Economic international relationship and development

Economic international relationship and development

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  • 1. ECONOMIC GROWTH AND DEVELOPMENT IN SEA ECONOMIC INTERNATIONAL RELATIONSHIP AND DEVELOPMENT Instructor: Msc. Nguyen Trong Dac Group 8: Do Thanh Vinh (Leader) Luong Thi Nhu Pham Anh Duong Nguyen Thi Hue
  • 2. Content • • • • Part 1: International Economics Relationship Part 2: International Trade and Development Part 3: International Finance and Development Part 4: International Investment and Development
  • 3. Part I: International Economics Relationship
  • 4. What is International Economics Relationship? Economic international relationship is a field of international relations – the study of relationships among countries. It is both an academic and public policy field and can be either positive or normative as it both seeks to analyze as well as formulate the foreign policy of particular states.
  • 5. A country often get IER with 5 main dimensions: • • • • • Trade Finance Investment Labor/ Human Capital Science and Technology.
  • 6. The reasons we have IER in the world? • The differences in natural conditions between countries: - Natural resources - The weather - … Ex: Vietnam
  • 7. The reasons we have IER in the world? • The uneven development between countries about the economic, scientific and technical
  • 8. The reasons we have IER in the world? • The development of economic lead inevitably to the international division of labor in order to improve the efficiency of using resource, economic growth
  • 9. The reasons we have IER in the world? • The objective requirements of specialization between countries in order to achieve the optimal scale for each industry. • The diversity of needs in each country
  • 10. The roles of IER For industrial development countries: • Expansion of economic power • Look for favorable investment (higher margins, take advantage of the country get investment)
  • 11. The roles of IER For developing countries: • Absorbing capital, advanced science and technology for industrialization, modernization of the economy • Efficient exploitation of resources, job creation, economic growth • Promote the production of goods on a large scale, large-scale market expansion.
  • 12. The roles of IER • - Example: In some industries, such as: garment industry service industries ancillary industries (industry support the assembly of the final product by providing detailed parts and components products of other intermediate goods) What do Vietnam gain? What do Japan, Taiwan gain?
  • 13. External economic strategy of developing countries and least-developed countries • Closed economy Strategy • Opened economy Strategy 11/27/2013
  • 14. Closed economy strategy • Economic development towards self-sufficiency • Only export the excess product after meet domestic consumer demand • Only receive international investment in commodity production "import substitution". 11/27/2013
  • 15. Closed economy strategy Advantages: • - The speed of economic growth is slow but steady • - Take less negative impact of the world economy: crisis, recession ... • - Potential of the country in a certain extent is exploited maximum. • - Economic independence => politically independent. 11/27/2013
  • 16. Closed economy strategy Disadvantages: • Contrary to the objective laws and trends of the times. • Limited ability to acquire capital, advanced scientific and technical => low labor productivity => country is lag • Often have to borrow to meet domestic demand 11/27/2013
  • 17. Closed economy strategy • Buying small domestic market, limited production scale => unemployment • Domestic market have a small buying ability, less abundant • Imported materials to produce => rising costs, inefficient production 11/27/2013
  • 18. Opened economy Strategy • Expanding economic relations, focusing on foreign trade, priority export. • Create an open environment to attract international investment, especially FDI. 11/27/2013
  • 19. Opened economy Strategy Advantages: • High economic growth • Exports go up => more foreign currency => import more advanced machinery and equipment => industrial modernization. • Expand production scale, market => attract workers • Promote domestic technological innovation to improve competitiveness. 11/27/2013
  • 20. Opened economy Strategy Disadvantages: • The speed of economic growth is precarious, unstable • The domestic economy is dependent on: + capital + technology + markets (input, output) • Economic dependence may depend on political • Economy develop unbalanced, one-sided. -
  • 21. International labor/ International human capital • International movement of labor in the form of labor export and labor import. • The labors who move to other country to get a job form of labor export often work in factory or as a home-making, care for children and the old people.
  • 22. International Science and Technology The form includes the coordination between countries to proceed: • Research • Patent • Design • Test • Exchange of research results • Information of science and technology • Application of new scientific and technological achievements into practical production
  • 23. Part II: International Trade
  • 24. Content • The definition of International Trade in economic • The relationship between international trade and economic growth - development • Advantage and dis-advantage of international trade • Benefit and risk of international trade • Trade barrier • The world trade organization • International trade in Viet Nam
  • 25. What is International Trade? • International trade (also known as foreign trade) is the exchange of goods and services between countries. • International trade is most commonly recognized in the exchange of goods or products. • Trading globally gives countries the opportunity to be exposed to goods and services not available in their own countries
  • 26. Why trade? Makes domestic market more contestable Import new technology International trade Attract new capital investment and innovation Transfer good idea
  • 27. International trade and economic growth • International trade contributes to the growth of a country’s economy in several ways: + Import + Export + Specialization International trade raises GDP increased productivity improved infrastructure
  • 28. Import - Export • A product that is bought from the global market is an import • A product that is sold to the global market is an export
  • 29. When a country should export or import
  • 30. Specialization • How does specialization encourage trade between countries? • When a country is good at making their product they specialize in it, improve the product to make more money. If another country doesn't have that but specializes in something the other one needs then they will trade. This is why specialization encourages trade.
  • 31. International trade and development • International trade allows developing nations to acquire capital from abroad in return for either natural resources or cheap labor • This foreign capital can then be invested in local industry, agriculture, infrastructure, and social improvements.
  • 32. Two aspects of international trade • • • • • • Advantages A country may import things which it cannot produce Maximum utilization of resources Benefit to consumer Reduces trade fluctuations Utilization of Surplus produces Fosters International trade Disadvantages •Import of harmful goods •It may exhaust resources •Over Specialization •Danger of Starvation •One country may gain at the expensive of another •It may lead to war
  • 33. Benefits of international trade • • • • • • • • • • Enhances the domestic competitiveness Takes advantage of international trade technology Increase sales and profits Extend sales potential of the existing products Maintain cost competitiveness in your domestic market Enhance potential for expansion of your business Gains a global market share Reduce dependence on existing markets Stabilize seasonal market fluctuations Closer ties between nations
  • 34. Risk in international trade Economic risk • Risk of concession in economic control • Risk of insolvency of the buyer • Risk of non-acceptance • Risk of Exchange rate Political risk • Risk of non- renewal of import and exports licenses • Risks due to war • Risk of the imposition of an import ban after the delivery of the goods • Surrendering of political sovereignty
  • 35. Risk in international trade • • • • • • Buyer country risks Changes in the policies of the government Exchange control regulations Lack of foreign currency Trade embargoes Commercial risk A bank's lack of ability to honor its responsibilities • • • • • • Other risks Cultural differences Lack of knowledge of overseas markets Language barriers Effects of unpredictable business environment and fluctuating exchange rates Sovereign risk Natural risk
  • 36. Trade barrier The most common sorts of trade barriers are: • • • • Subsidies Tariffs Quotas Embargoes
  • 37. Subsidies • Subsidies are often placed to protect domestic industries • In Vietnam, the items are often heavily subsidized by the government that is fuel (gas, petrol,..) electric, construction material (steel…) • Subsidies can stabilize the price of a goods at a reasonable level and it makes imports non-competitive
  • 38. Economic effects of subsidies
  • 39. Tariffs • A tariff is a tax. It adds to the cost of imported goods and is one of several trade policies that a country can enact • Tariffs were a large source of government revenue
  • 40. Economic effects of tariffs
  • 41. Quotas • Import quotas: Puts limits on the quantity of certain products that can be legally imported into a particular country during a particular time frame • Governments generally set import quotas by selling licenses to specific importers, allowing them to import a specified quantity.
  • 42. Embargoes • Embargoes are a government order which completely prohibits trade with another country. • The embargo is the harshest type of trade barrier and is usually enacted for political purposes to hurt a country economically and thus undermine the political leaders in charge • Example: Korea embargoed by the United Nations. Because of the country's threats of nuclear weapons
  • 43. Free trade • Free trade is a system in which goods, capital, and labor flow freely between nations, without barriers which could hinder the trade process. • A number of barriers to trade are struck down in a free trade agreement. Such as: Taxes, tariffs, and import quotas… • It will lower prices for goods and services by promoting competition. • Free trade can also foster international cooperation, by encouraging nations to freely exchange goods and citizens.
  • 44. Fair trade • Fair Trade is a trading partnership, based on dialogue, transparency and respect • Fair Trade contributed to sustainable development • Fair Trade organizations have a clear commitment to Fair Trade as the principal core of their mission • Fair Trade is more than just trading: it proves that greater justice in world trade is possible
  • 45. The different between free trade and fair trade + Labor and human right Free trade: not include minimum safety, human rights and wage standards Fair trade: insisting on reasonable compensation for workers and reasonable safety, health and human standards of workers. + Financing Free trade is financed on a cash-on-delivery basis Fair trade is able to extend credit that can provide income during lean periods. + Marketing Free trade products are marketed in a way that maximizes sales and profits. Fair trade marketing, while seeking profit and sales, focuses on educating the consumer.
  • 46. General Agreement on Tariffs and Trade • The General Agreement on Tariffs and Trade (GATT) was established in 1948. • Adopted by 23 countries, including the United States • GATT's main objective was to reduce the barriers of international trade through the reduction of tariffs, quotas and subsidies. • Encouraging of fair competition on the basis of mutual compromise. • Ensuring of predictable and transparent trade policy of each parties.
  • 47. The World Trade Organization • WTO is successor of the General Agreement on Tariffs and Trade (GATT) signed in Geneva in 1947 • WTO has 156 members (22/08/2012) and Vietnam is the 150th member. • Includes services and trade-related aspects of intellectual property, such as books, movies, and computer programs • In WTO, average tariffs will fall from 6% to 4% • Includes a dispute settlement body that should be faster, more automatic, and less susceptible to blockage than GATT
  • 48. The differences between GATT and WTO • GATT dealt with trade in goods. WTO covers services and intellectual property as well. • WTO dispute settlement is faster, more automatic than GATT’s. Its rulings cannot be blocked. • WTO reach into domestic areas that were previously immune from external pressures. • GATT agreements temporary, WTO agreements are permanent; the agreements themselves describe how the WTO is to function.
  • 49. International trade in Viet Nam • Country Strong Points The country's strong points are: - Positive economic prospects in terms of growth, despite the global crisis; - A young, cheap, rapidly growing and more and more technologically qualified manpower; - A certain social-political stability; - A government committed to liberalizing the economy and to introducing reforms based on the free market.
  • 50. International trade in Viet Nam • Country Weak Points The country's weak points are: - Weak investment and financial freedom; - The lack of guarantees for property rights; - A high level of corruption (in the legal system, as well as for civil service).
  • 51. How to develop international trade in Vietnam Export: • Focus on key export commodities such as agricultural products, aquatic products ... • Innovate management policies for export activities Import: • Address effectively the relationship among importproduction-export • Innovate management policies for import activities • Governments need to make rational policies consistent with local market
  • 52. Part III: International finance
  • 53. 1. Definition International finance The emergence and existence of international financial relations is an inevitable financial categories, derived from the basis of the following objective:  Economy: the role of decision for the generation and development of the international financial system.  Politics: a direct impact on the form and extent of international financial relations.
  • 54. 1. Definition International finance  On a macro-economic perspective: - Exchange rate. - International balance of payments. - Monetary system, international finance. - Foreign debt and foreign debt management.  A market perspective (micro economics): - Assessment and Risk Management International. - International financial markets. - International investment directly and indirectly.
  • 55. Two big problem of SEA now that foreign aid and international debt”. 1.1 Foreign aid: - Definition: is consists of financial flows, technical assistance, and commodities given by the residents of one country, either as grants or as subsidized loans. Aid can be given or received by governments, charities, foundations, businesses, or individuals.
  • 56. 1.1 Foreign aid: • Not all transfers from wealthy countries to poor countries are considered to be foreign aid. • According to the DAC, to be counted as foreign aid the assistance must meet two criteria: 1. It must be designed to promote economic development and welfare as its main objective. 2. It must be provided as either a grant or a subsidized loan.
  • 57. 1.1 Foreign aid: • The DAC group aid flows into three broad categories: 1. ODA is the largest, consisting of aid provided by donor governments to low- and middle-income countries. 2. OA is aid provided by governments to richer countries with per capita incomes higher than approximately $9,0005 and countries that were formerly part of the Soviet Union or its satellites. 3. Private voluntary assistance includes grants from nongovernment organizations, religious groups, charities, foundations, and private companies.
  • 58. 1.1.1 Reality of foreign aid in the world World Top Ten Foreign Aid Donor Countries Country In Billion Dollars United States 12.9 Japan 9.2 Germany 5.4 France 5.2 United Kingdom 4.8 Netherlands 3.4 Italy 2.3 Canada 2.0 Sweden 1.8 Norway 1.8
  • 59. 1.1.1 Reality of foreign aid in the world Net official development assistance (ODA) in 2006 Millions of US dollars United States 35 000 Germany 30 000 25 000 20 000 United Kingdom Japan 15 000 10 000 5 000 0 Netherlands Italy Luxembourg
  • 60. 1.1.1 Reality of foreign aid in the world 0.85 0.9 United States 0.74 0.8 % of GDP 0.7 Germany 0.6 United Kingdom 0.5 0.28 0.3 0.2 Japan 0.36 0.4 0.16 0.19 Netherlands 0.15 Italy 0.1 Luxembourg 0 Net ODA in 2006 as a Percentage of Donor GDP
  • 61. 1.1.1 Reality of foreign aid in the world  However, when aid is measured as a share of the donor’s income. The most generous donors from this perspective are Norway, Luxembourg, Denmark. Sweden, and the Netherlands, each of which provided between 0.74 and 0.87 percent of GDP in ODA. The is one of the smallest donors by t his measure, with ODA equivalent to about 0.16% of U.S income.  Although U.S ODA levels as a share of income are small compared with the other countries.
  • 62. 1.2 The relationship among aid, growth and development: 1.2.1 Aid Has a Positive Impact on Economic Growth and Development: - Promoting health, education, and the environment. - Providing emergency assistance and humanitarian relief. - Supporting economic and political stability.
  • 63. 1.2 The relationship among aid, growth and development: Aid, saving, and tax revenue: • Not all aid is provided as investment goods or even aimed at increasing investment and growth. • Even where aid is aimed directly at investment, the impact could be partially offset by a reduction in either private saving or government saving.
  • 64. 1.2 The relationship among aid, growth and development: Aid Has a Conditional Relationship with Growth, Stimulating Growth Only under Certain Circumstances, Such as in Countries with Good Policies or Institutions: • Characteristics of the recipient country. • Donors practices.
  • 65. Type of aid 1) Emergency and humanitarian aid, likely to be negatively associated with growth, since it increases sharply at the same time growth falls because of an economic shock. 2) Aid that might affect growth only after a long period of time, if at all, and so a growth impact may be difficult to detect, such as aid for health, education, the environment, and to support democracy. 3) Aid directly aimed at affecting growth (building roads, ports, and electricity generators, or supporting agriculture).
  • 66. 1.3 Solutions to improve the effectiveness of aid: • Country selectivity • Recipient participation. • Results-based management: There are three basic objectives: 1) Results-based management can help donors allocate funds toward program that are working. 2) Ongoing reviews can detect problems at an early stage and help modify and strengthen existing programs. 3) Donors and recipient can better learn what approaches have worked and what have not.
  • 67. 1.4 Foreign aid to Viet Nam • The World Bank’s assistance program of foreign aid to Vietnam has three objectives: – to support Vietnam’s transition to a market economy, to enhance equitable and sustainable development, and to promote good governance. – From 1993 through 2004, Vietnam received pledges of US$29 billion of Official Development Assistance (ODA), of which about US$14 billion, or 49 percent, has been disbursed. In 2004 international donors pledged ODA of US$2.25 billion, of which US$1.65 billion was disbursed.
  • 68. 1.4 Foreign aid to Viet Nam After 16 public meetings held CG, Vietnam has 51 donors, including 28 bilateral donors and 23 multilateral donors have regular ODA programs. • A large number of bilateral donors, such as: Australia, Germany, Korea, USA, Japan, France, Singapore, Switzerland, China, United Kingdom, ... • World Bank Group (WB) • International Monetary Fund (IMF) • the Asian Development Bank (ADB) • European Commission (EC) • European Union (EU)
  • 69. 1.4 Foreign aid to Viet Nam The organizations of the UN system, including: • UN Population Fund (UNFPA) • Program of the United Nations Industrial Development (UNIDO) • United Nations Development Program (UNDP) • United Nations Children's Fund (UNICEF) • International Fund for Agricultural Development (IFAD) • Food and Agriculture Organization (FAO) • World Health Organization (WHO). • The international non-governmental organizations in Vietnam (NGO)
  • 70. 1.4 Foreign aid to Viet Nam The use of ODA priorities for works and projects in the following areas: • Agriculture and rural development (agriculture, irrigation, forestry, fisheries) in combination with poverty reduction. • Develop economic infrastructure towards modernization. • Development of social infrastructure (health, education, population…) • Protection of the environment and natural resources management. • Strengthening institutional capacity, management, technical and human resource development; technology transfer, capacity building and research development.
  • 71. 1.4 Foreign aid to Viet Nam 9 8 7.9 2010 2011 8 7 5.9 6 Billion USD 5.4 5 5 4.4 3.7 4 3.44 2.77 3 2.26 2 1.81 1994 2.4 1996 1997 2.84 2.4 2.5 2.2 1.94 1993 2.43 2.85 1 0 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Situation ODA commitment period 1993 - 2011
  • 72. 2. Foreign debt 2.1. Overview of foreign debt: Foreign debt is an outstanding loan that one country owes to another country or institutions within that country. Foreign debt also includes due payments to international organizations such as the International Monetary Fund (IMF). The debt may be comprised of fees for goods and services or outstanding credit due to a negative balance of trade. Total foreign debt can be a combination of short-term and long-term liabilities.
  • 73. 2. Foreign debt 2.1.1 Debt flows to developing countries: 2.1.2. Debt sustainability indicators: 1. Debt/GDP. 2. Debt/exports (and NPV debt/exports). 3. Debt/revenue (or NPV debt/revenue). 4. Debt service/exports . 5. Debt service/revenue. 6. Short-term foreign debt/foreign
  • 74. 2. Foreign debt 2.2. Advantages and disadvantages
  • 75. 2.2.1 Advantages 1. 2. From a national perspective, borrowing permits a country to invest more than it can save and import more than it can export. If the additional funds finance productive investment, they should yield sufficient returns to pay the interest and principal on the initial foreign inflows. Since capital is relatively scarce in low-income countries, these countries have the potential to realize higher rates of return on investment and more rapid economic growth than richer countries, providing the foundation for lending from rich to low-income countries. When a domestic firm borrows abroad, there are no controversies over foreign ownership, profit repatriation, tax holidays, and the like that arise with foreign direct investment (FDI). In addition, foreign borrowing can be undertaken much more quickly and easily than FDI.
  • 76. 2.2.2 Disadvantages Besides the undeniable advantages, foreign debt has some downsides as well: 1. 2. 3. The debts must be paid even when a project goes bad. Too much borrowing of the wrong kind or for the wrong purposes can leave developing countries vulnerable to sudden capital withdraws and financial crises. Short-term debt, in particular, can very quickly switch from rapid inflow to rapid outflow, which can cause sudden plunges in exchange rates and skyrocketing interest rates and wreak havoc on banks, private companies, and government budgets. Borrowing too much to finance consumption or poorly conceived investment also can lead to trouble. Borrowing is much easier politically than raising taxes to pay for spending, especially if governments do not think they will still be in office when it is time to repay.
  • 77. 2. Foreign debt 2.3. Debt crisis in low-income countries Low-income countries were hit by the same set of strong international economic shocks: high oil import prices, low commodity prices, the end of the gold standard, and weak market demand in the industrialized countries. => Governments kept budget deficits high, erected significant barriers to trade, distorted market prices, and failed to provide basic infrastructure and health and education services.
  • 78. 2. Foreign debt 2.4 How to escape from the crisis: 1. Refinancing: involving making new loans to repay the old. 2. Rescheduling. 3. Reduction: in which the amount actually owed is reduced (i.e., forgiven), either partly (a write-down) or completely (a wirte-off). 4. Buybacks. 5. Debt-equity swaps: in which creditors are given equity in a company
  • 79. 2. Foreign debt 2.5 Lessons from the crises: -These crises suggest that governments should proceed carefully in liberalizing domestic financial transactions and ensuring parallel development of the requisite regulatory institutions. -The crises indicate that fixed rates create vulnerability to a panic and ultimately lead to huge economic adjustments when the exchange rate no longer can be defended. - In terms of foreign capital inflows, there are clear differences between FDI and other long-term capital and short-term capital. Long-term capital flows are much less prone to panic and more strongly associated with long-term investment and growth => governments should be much more careful about, and at times possibly even discourage, short-term flows
  • 80. 2.6 Foreign debt in Viet Nam Order Indicators Counted to 12/31/2003 1 Total national debt (Billion USD) - Government debt - Business debt 13.251 2 Total debt/GDP 32% 3 Total debt/Export 5.8% 10.120 3.231 Foreign debt of Vietnam counted in 12/31/2003 Source: Ministry of Finance
  • 81. 2.6 Foreign debt in Viet Nam The indicators to evaluate debt level of Vietnam (2005) Order Indicators HIPC (%) Vietnam (%) 1 Net present value of debt/Export 150 36 2 Net present value of debt/Budget revenue (minus foreign aid) 250 95 3 Repayment/Export 15 2 4 Repayment/Budget revenue (minus foreign aid) 10 6
  • 82. 2.6 Foreign debt in Viet Nam • According to the Ministry of Finance, the country's foreign debt by the end of 31/12/2009 39% of GDP and the highest level since 2005. However, if based on the level of foreign exchange reserves, the total outstanding debt of Vietnam is still in a safe threshold. Foreign exchange reserves to total short-term foreign debt of the Philippines is 290%, while the recommendations of the World Bank is more than 200%. Debt obligations of the Government of the total state budget of Vietnam is 5.1%, the safety threshold of WB is less than 35%.
  • 83. Part IV: International investment and development
  • 84. The basics of international investment 1. Definition International investment is a process in which the movement of capital from one country to another country to make the investment projects to bring benefits to the participating countries
  • 85. Characteristics • International Investment is a necessity factor for each country • International Investment leads to the positive and negative impacts for the investor and the investee. • International investment in each group of countries is differ in size, structure, and policies • They carry the characteristics of investment in general: - high profitable - high risky
  • 86. The role and impact 1. For the investors Positive Impacts: • Improving the efficient use of capital. • Building a stable market for supply of raw materials. • Expanding economic strength, improve reputation in the international market. • Reducing risks, changes in economic structure towards efficiency.
  • 87. The role and impact Negative impact: • Investors may face greater risks. • Leads to reduce employment in the host country. • May be loss of the copyright in the process of technology transfer. • Investors don’t want to do business in their country that wants to do business in foreign countries.
  • 88. The role and impact 2. For the investees Positive impacts:  For the group of developed countries: • Solving difficult problems of social and economic. • Creating new jobs, increase revenue in the form of taxes. • Creating a competitive environment to promote the development of economy and trade. • Learning more advanced management experience of other countries
  • 89. The role and impact  For the least developed countries and developing countries: • Help speed up the development of the economy. • Attracting more workers, create jobs, solve unemployment. • Contributing to the improvement of the competitive environment. • Contributing to reception of science and technology from other countries.
  • 90. The role and impact Negative impact: • Leading to exploitation of natural resources excessively. • Caused differentiation, increasing the development gap in regions and countries. • Increasing the problem of social evils and diseases. • Be affected or dependent on the demand from the investors.
  • 91. Cause of formation and development • Due to the imbalance of the factors of production between countries • Due to meet interests of the parties involved  For the investors  For the investees • And in other case.
  • 92. Forms of International Investment 1. Foreign Direct Investment (FDI):  Definition: FDI is a long-term investment activities in which the investor directly manage and controll using capital activities. This is the capital flow high stability, long time investment, managed by the investor directly.
  • 93. Forms of International Investment 2. Indirect Investment:  Definition: It is the type of movement of capital between countries, in which the owner does not directly manage and controll using capital activities. It depends on the level of management and organization management of the investee. Investment efficiency is not high.
  • 94. Forms of International Investment 3. International trade credit:  Definition: It is a form of international investment through the form of lending and borrowing with interest rate market between two countries.
  • 95. Forms of International Investment 4. The official development assistance (ODA):  Definition: ODA is developing cooperation between the government of a country with foreign governments, intergovernmental organizations or transnational..
  • 96. The areas of investment  60 years before, international investment mainly focus on the traditional sectors: mining of natural resources, agricultural development by investing in plantations and agricultural product processing.
  • 97. • Since 70 years, the field of investment has changed:  Reducing investment in the sectors of infrastructure and farm economy  Investing in oil and gas, and some minerals such as uranium, titanium, platinum, ...  Investing in the manufacturing industry, service, finance, banking, insurance, tourism, transportation, telecommunications...
  • 98. The risks in International Investment • • • • • • Changes in currency exchange rates Dramatic changes in market value Political, economic and social events Lack of liquidity Less information Reliance on foreign legal remedies.
  • 99. FDI in the world • FDI inflows in the world tend to move from industrialized countries to the emerging markets such as Asia and South East Europe. • FDI growth in the developing economies:  Latin America and the Caribbean with 34.6 percent growth in 2011 compared to 21.1% in 2010.  Southeast Europe increased 30.6% in 2011 from 0.8% in 2010.  The Asia Pacific region, the Southeast Asia's FDI increase 16%.
  • 100. FDI Inflows in the World ($ billions) Source: UNCTAD database
  • 101. FDI in the world
  • 102. Why Asia Pacific is the most attractive FDI region in the world?
  • 103. Why Asia Pacific is the most attractive FDI region in the world? • It is not only the most populous area in the world but also one of the areas most vibrant economy. • It is the most dynamically developing areas of the world with many economic organization : APEC, ASIAN... • Asia Pacific accounted for nearly half of global trade value and accounts for 60% of total U.S. exports value.
  • 104. Why Asia Pacific is the most attractive FDI region in the world? • Although the economic growth of the Asia Pacific region slowed significantly in 2012 due to a number of factors impact on the regional economy, especially the debt crisis in Europe. However, Asia Pacific is still the region with the fastest growth rate of the world. • China is the second largest economy in the world and foreign currency reserves up to $ 3.2 billion, it is actually prospective investors to make solutions for the debt problem in Europe. • With the ability to export and domestic demand, countries such as China, India and ASEAN ... will continue to develop economic.
  • 105. FDI inflows by host regions in Asia (millions of dollars) Region 1 2 3 4 1996 1997 1998 1999 2000 2001 Asia 93,311 105,828 96,109 102,779 133,707 102,066 West Asia 2,898 5,645 6,705 324 688 4,133 Central Asia 2,590 3,844 3,152 2,466 1,895 3,569 96,338 86,252 99,990 131,123 94,365 South, East and 87,843 South- East Asia Percentage of FDI flows Received by different Regions 1 2 3 4 Asia 100.00 100.00 100.00 100.00 100.00 100.00 West Asia 3.11 5.33 6.98 0.32 0.51 4.05 Central Asia 2.78 3.63 3.28 2.40 1.42 3.50 91.03 89.74 97.29 98.07 92.45 South, East and 94.12 South- East Asia Source: World Investment Report 2002
  • 106. Foreign Direct Investment in Vietnam
  • 107. FDI Registered and Implemented Capital 10000 9212 9000 8000 7000 5000 4000 4827 4071 2652 3000 2000 5548 5516 6000 2950 2371 1515 2300 2156 2400 2150 2431 1900 1905 1000 0 1994 1995 1996 1997 Registered capital 1998 1999 implemented capital 2000 2001
  • 108. Top ten FDI Countries and Territories as of 2 July 2002 Countries and territories Number of projects Capital ( $ billion) Singapore 254 6.90 Taiwan 832 5.30 Japan 339 4.12 South Korea 403 3.46 Hong Kong 234 2.82 France 117 2.04 B.V.Islands 144 1.76 Netherlands 42 1.65 Russia 41 1.51 UK 40 1.17
  • 109. Number of projects by sector as of 2 July 2002 Others 20% Heavy industry 28% Service 6% Hotel and 4% Agriculture and 11% Food industry 5% Oil and gas 1% Light industry 25%
  • 110. Conclusion • Economics and international relations are intimately intertwined. • The development of a country depends on so many factors, not just economic but also natural, social or political factors. • The link among international trade, finance and investment is extremely close and strongly impact to the growth and further, the development of a country. It is important to note that the government policies have a strange power to change the operation of economy.

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