foreign direct investment
,
the direction of fdi
,
the source of fdi
,
why foreign direct investment
,
the form of fdi: acquisitions versus greenfield i
,
foreign direct investment in the world economy
,
trends in fdi
,
theories of foreign direct investment
,
the radical view
,
benefits and costs of fdi
Foreign direct investment (FDI) occurs when a firm invests directly in new facilities in a foreign country. FDI is undertaken to take advantage of lower costs for resources unavailable in the home country. The firm maintains significant control over the foreign operation and can affect managerial decisions. There are several types of FDI including inward FDI into a country and outward FDI from a country. India allows up to 100% FDI under an automatic route in most sectors to encourage economic growth and development.
Foreign direct investment (FDI) refers to cross-border investment by a company or individual in business interests located in another country. FDI plays an important role in India's economic development by providing capital, jobs, technology and boosting growth. While India receives around 25% of China's FDI, various sectors like infrastructure, automotive, airlines and textiles have seen increased FDI inflows in recent years due to government reforms. FDI can benefit India through infrastructure development, increased competition and technology advancement.
The document discusses international trade theory and the benefits of free trade. It covers theories such as absolute advantage, comparative advantage, Heckscher-Ohlin theory, product life cycle theory, new trade theory, and Porter's diamond of competitive advantage. These theories explain patterns of trade between countries and how free trade allows specialization and gains from trade. The document also discusses concepts such as the balance of payments and whether a current account deficit is problematic.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country. There are several types of FDI including horizontal FDI where a company operates the same activities abroad as at home, and vertical FDI where different stages of production are located in different countries. FDI can be motivated by seeking resources, markets, efficiencies, or strategic assets. It provides benefits like job creation and technology transfer but may also displace domestic companies. India allows FDI through an automatic route without approval for some sectors, and through a government approval process for other sectors regulated for national interest.
This document provides an overview of foreign direct investment (FDI) presented to Sir Ahmed Ghazali. It defines FDI and discusses types (inward and outward), forms (greenfield and mergers & acquisitions), sources, theories, stages, and factors in the decision framework for FDI. Theories covered include Mac Dougall-Kemp, industrial organization, and location specific theories. Benefits are outlined for both host and home countries, while drawbacks are noted for host countries. The document is a comprehensive introduction to FDI presented by a group of students.
Modes of entry to international businessHarsh Bansal
The document discusses different modes of entry into international business, including exporting, licensing, franchising, contract manufacturing, management contracts, foreign direct investment (FDI) without alliances, and FDI with alliances. It provides details on the key characteristics, advantages, and disadvantages of each mode. Exporting allows gradual market entry at relatively low financial risk but with logistical complexities. Licensing and franchising provide low-cost ways to assess markets but have dependence on partners. FDI through greenfield investment gives full control but requires high expenses. Strategic alliances through mergers, acquisitions, and joint ventures combine strengths but also carry shared ownership risks.
This document defines foreign direct investment and outlines some of the main theories, forms, strategies, and costs/benefits associated with FDI. It defines FDI as long-term investments involving control or influence over management. The key theories discussed are the MacDougall-Kemp hypothesis of capital moving from abundant to scarce economies, and industrial organization and location-specific theories. The main forms are greenfield investment, mergers and acquisitions, and brownfield investment. Strategies include firm-specific advantages and lowering costs. Benefits are factors of production, economic growth, and balance of payments, while costs include cultural influence and resource overuse.
Foreign direct investment (FDI) occurs when a firm invests directly in new facilities in a foreign country. FDI is undertaken to take advantage of lower costs for resources unavailable in the home country. The firm maintains significant control over the foreign operation and can affect managerial decisions. There are several types of FDI including inward FDI into a country and outward FDI from a country. India allows up to 100% FDI under an automatic route in most sectors to encourage economic growth and development.
Foreign direct investment (FDI) refers to cross-border investment by a company or individual in business interests located in another country. FDI plays an important role in India's economic development by providing capital, jobs, technology and boosting growth. While India receives around 25% of China's FDI, various sectors like infrastructure, automotive, airlines and textiles have seen increased FDI inflows in recent years due to government reforms. FDI can benefit India through infrastructure development, increased competition and technology advancement.
The document discusses international trade theory and the benefits of free trade. It covers theories such as absolute advantage, comparative advantage, Heckscher-Ohlin theory, product life cycle theory, new trade theory, and Porter's diamond of competitive advantage. These theories explain patterns of trade between countries and how free trade allows specialization and gains from trade. The document also discusses concepts such as the balance of payments and whether a current account deficit is problematic.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country. There are several types of FDI including horizontal FDI where a company operates the same activities abroad as at home, and vertical FDI where different stages of production are located in different countries. FDI can be motivated by seeking resources, markets, efficiencies, or strategic assets. It provides benefits like job creation and technology transfer but may also displace domestic companies. India allows FDI through an automatic route without approval for some sectors, and through a government approval process for other sectors regulated for national interest.
This document provides an overview of foreign direct investment (FDI) presented to Sir Ahmed Ghazali. It defines FDI and discusses types (inward and outward), forms (greenfield and mergers & acquisitions), sources, theories, stages, and factors in the decision framework for FDI. Theories covered include Mac Dougall-Kemp, industrial organization, and location specific theories. Benefits are outlined for both host and home countries, while drawbacks are noted for host countries. The document is a comprehensive introduction to FDI presented by a group of students.
Modes of entry to international businessHarsh Bansal
The document discusses different modes of entry into international business, including exporting, licensing, franchising, contract manufacturing, management contracts, foreign direct investment (FDI) without alliances, and FDI with alliances. It provides details on the key characteristics, advantages, and disadvantages of each mode. Exporting allows gradual market entry at relatively low financial risk but with logistical complexities. Licensing and franchising provide low-cost ways to assess markets but have dependence on partners. FDI through greenfield investment gives full control but requires high expenses. Strategic alliances through mergers, acquisitions, and joint ventures combine strengths but also carry shared ownership risks.
This document defines foreign direct investment and outlines some of the main theories, forms, strategies, and costs/benefits associated with FDI. It defines FDI as long-term investments involving control or influence over management. The key theories discussed are the MacDougall-Kemp hypothesis of capital moving from abundant to scarce economies, and industrial organization and location-specific theories. The main forms are greenfield investment, mergers and acquisitions, and brownfield investment. Strategies include firm-specific advantages and lowering costs. Benefits are factors of production, economic growth, and balance of payments, while costs include cultural influence and resource overuse.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
Multinational corporations (MNCs) own or control production in multiple countries besides their home country. They have large-scale international operations through things like imports/exports, foreign investments, contract manufacturing, and opening plants abroad. MNCs can benefit host countries by increasing investment, employment, and income as well as transferring technology. However, they may also threaten economic sovereignty, kill local businesses through monopolies, and deplete natural resources. Both home and host countries experience advantages like jobs, exports, and development, but also disadvantages like unfavorable capital flows and neglect of the home country.
- International business involves commercial transactions between two or more countries, including trade in goods and services, investments, and transportation. It can involve private companies or governments.
- There are several approaches that companies take when entering international business - from an ethnocentric view focusing only on the home country market, to a geocentric view developing a standardized approach across all foreign markets.
- International business offers both advantages like access to new markets and resources, as well as disadvantages such as additional costs and risks of operating in foreign environments. Liberalization of trade and improvements in transportation and communication have contributed to recent growth in international business.
The slides contain discussion on the global capital market as well as international lending. It also identifies the different bond markets at well as current data on international lending.
Foreign direct investment refers to investment made by foreign companies to establish wholly owned subsidiaries in another country or purchase shares of existing companies to manage them. It provides capital, technology, expertise and new markets for host countries, but can also negatively impact local industries and increase foreign dependence. For home countries, it leads to foreign exchange inflows but can also reduce exports and employment if production shifts abroad.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country, while retaining control. FDI involves acquiring ownership of assets to control production, distribution, and other activities of a firm in another country. The key factors that influence FDI include natural resources, market size, availability of cheap labor, interest rates, socio-economic conditions, political stability, and government policies toward foreign investment. Countries that offer natural resources, large markets, low-cost labor, high returns on investment, political stability, and incentives are most attractive for foreign direct investment.
International Business – Meaning, Definition, History, Scope and Features Sundar B N
International business involves commercial transactions between two parties located in different countries. It includes importing and exporting goods and services, as well as foreign direct investment through vehicles like licensing and franchising agreements. While international business opens opportunities for increased trade and specialization, it also introduces higher risks related to foreign exchange rates, legal compliance in multiple jurisdictions, and longer timeframes. Proper analysis of political, economic, cultural and legal factors is needed before a company establishes foreign operations.
The document discusses country risk analysis. It defines country risk as risks arising from changes in a country's business environment that may negatively impact profits or asset values. It identifies several political, economic, financial, and subjective factors that contribute to country risk, such as currency controls, civil unrest, economic growth rates, corruption, and consumer attitudes. The document also discusses methods for assessing country risk like checklists, the Delphi technique, and quantitative analysis. It provides examples of how country risk ratings can inform investment decisions and be incorporated into capital budgeting.
Advantages and disadvantages of INTERNATIONAL BUSINESSDr. Ravneet Kaur
The document outlines several advantages and disadvantages of international business. It notes that international business allows countries to earn foreign currency through exports, specialize production, make optimal use of resources, and increase standards of living. It also benefits consumers through greater product choice and availability. However, it can also negatively impact economies through increased competition, potential exploitation of developing countries, and cultural influence.
The document discusses Eurocurrency and the Eurodollar market. It defines Eurocurrency as currency deposited by governments or corporations in banks outside their home market, such as US dollars deposited in a London bank. The Eurodollar market refers specifically to US dollar deposits held in banks outside the US. The market originated in the late 1950s when European banks began accepting dollar deposits. It grew due to less regulation than in the US market, allowing for higher interest rates and more banking competition internationally. However, the unregulated nature of offshore banking also carries greater risks of bank failures and foreign exchange volatility for borrowers.
Globalisation and strategies for going globalMayanka Singh
This document discusses various strategies for companies to go global, including exporting, licensing/franchising, management contracts, contract manufacturing, and turnkey contracts. It provides details on each strategy, such as licensing involving paying fees to use intellectual property, and management contracts separating ownership from operation of a business. Globalization is said to have benefits like raising living standards and market expansion, but also challenges like job losses in some countries.
International financial management involves managing finances across borders to maximize shareholder wealth. It emerged as countries liberalized and opened their economies. Managing international finances differs from domestic finances in areas like foreign exchange risk, political risk, market imperfections, and enhanced opportunities. Companies can raise capital abroad through licensing, franchising, subsidiaries, strategic alliances, and exports. Proper international financial management helps organizations operate efficiently in global markets.
Foreign exchange exposure is the risk associated with activities involving currencies other than a firm's home currency. It is the risk that foreign currencies may fluctuate in a way that financially harms the firm. There are three main types of foreign exchange exposure: transaction, economic, and translation. Firms can assess and manage their exposures through hedging strategies like financial contracts and operational techniques. Whether to hedge depends on factors like a firm's currency forecasts and focus on its core business versus currency speculation.
Foreign Direct Investment - FDI - International Business - Manu Melwin Joymanumelwin
This document discusses foreign direct investment (FDI) and how governments encourage and discourage it. It defines FDI and the main types - greenfield and brownfield investments. Governments encourage FDI to create jobs, expand knowledge, and boost economic growth. They provide financial incentives, improve infrastructure, streamline regulations, invest in education, and ensure stability. However, some governments restrict FDI through ownership limits and taxes to maintain control of key industries or persuade companies to invest domestically instead of abroad.
This document discusses various modes of international market entry for companies looking to expand globally. It describes exporting, both direct and indirect; offshore services; international licensing; franchising; turnkey projects; contract manufacturing; and management contracts. For each entry mode, it provides brief definitions and discusses their pros and cons. Management contracts, turnkey projects, and contract manufacturing are referred to as "specialized entry modes" since they involve shorter-term investments and less financial risk than other options. The document aims to help companies understand the different options available for entering international markets.
This document summarizes the types and motivations of foreign direct investment. It discusses inward and outward foreign direct investment, and the factors that encourage and restrict them. It also describes different types of foreign direct investments like greenfield investments, mergers and acquisitions, horizontal and vertical foreign direct investments. Finally, it outlines the main motivations for foreign direct investment, including resource seeking, market seeking, efficiency seeking and strategic asset seeking.
International business finance Foreign Exchange MarketsMeghna Baid
This study examines factors that influence consumers' intentions to purchase foreign exchange products online. It analyzes how internet usage, website content, context, infrastructure, and trust impact purchase intention. The results show that trust in brokers and the market, positive website context design, and reliable infrastructure positively correlate with purchase intention. Website content was found to have less influence. Overall, the study aims to help foreign exchange companies better understand what drives online purchasing and loyalty in order to improve their services and attract more investors.
Governments intervene in international trade for both political and economic reasons. Politically, they aim to protect domestic industries and jobs from foreign competition. Economically, they argue for strategies like protecting infant industries. Governments use various tools for intervention, such as tariffs, subsidies, quotas, and anti-dumping policies. These can benefit domestic producers but hurt consumers and overall economic efficiency. The World Trade Organization was created to liberalize trade and enforce global trade rules, but negotiations continue on further reducing barriers to trade.
Foreign exchange risk, also known as currency risk, refers to the financial risk posed by unexpected changes in exchange rates. It affects investors and businesses involved in international trade or foreign investments. There are three main types of foreign exchange exposure: transaction, economic, and translation. Transaction exposure involves existing foreign currency transactions, economic exposure impacts future cash flows and firm value, and translation exposure affects financial reporting due to exchange rate movements between periods. Companies can use hedging strategies like forward contracts, options, and money market operations to eliminate or reduce foreign exchange risk.
This document provides an overview of Chapter 7 from the textbook "International Business 7e" by Charles W.L. Hill. The chapter discusses foreign direct investment (FDI), including definitions of key terms like FDI flows and stocks. It also summarizes trends in FDI globally and by region over time. The chapter then examines theories for why firms undertake FDI rather than exporting, and looks at the pattern and sources of FDI flows between countries. It concludes by discussing political views on FDI and weighing the benefits and costs of inward FDI for host countries.
The document discusses foreign direct investment (FDI), including how FDI occurs when a firm invests directly in new facilities abroad. It has increased significantly in recent decades as firms undertake greenfield investments or acquisitions in foreign countries. Theories explore why firms choose FDI over alternatives and the factors influencing the pattern of FDI flows between countries.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
Multinational corporations (MNCs) own or control production in multiple countries besides their home country. They have large-scale international operations through things like imports/exports, foreign investments, contract manufacturing, and opening plants abroad. MNCs can benefit host countries by increasing investment, employment, and income as well as transferring technology. However, they may also threaten economic sovereignty, kill local businesses through monopolies, and deplete natural resources. Both home and host countries experience advantages like jobs, exports, and development, but also disadvantages like unfavorable capital flows and neglect of the home country.
- International business involves commercial transactions between two or more countries, including trade in goods and services, investments, and transportation. It can involve private companies or governments.
- There are several approaches that companies take when entering international business - from an ethnocentric view focusing only on the home country market, to a geocentric view developing a standardized approach across all foreign markets.
- International business offers both advantages like access to new markets and resources, as well as disadvantages such as additional costs and risks of operating in foreign environments. Liberalization of trade and improvements in transportation and communication have contributed to recent growth in international business.
The slides contain discussion on the global capital market as well as international lending. It also identifies the different bond markets at well as current data on international lending.
Foreign direct investment refers to investment made by foreign companies to establish wholly owned subsidiaries in another country or purchase shares of existing companies to manage them. It provides capital, technology, expertise and new markets for host countries, but can also negatively impact local industries and increase foreign dependence. For home countries, it leads to foreign exchange inflows but can also reduce exports and employment if production shifts abroad.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country, while retaining control. FDI involves acquiring ownership of assets to control production, distribution, and other activities of a firm in another country. The key factors that influence FDI include natural resources, market size, availability of cheap labor, interest rates, socio-economic conditions, political stability, and government policies toward foreign investment. Countries that offer natural resources, large markets, low-cost labor, high returns on investment, political stability, and incentives are most attractive for foreign direct investment.
International Business – Meaning, Definition, History, Scope and Features Sundar B N
International business involves commercial transactions between two parties located in different countries. It includes importing and exporting goods and services, as well as foreign direct investment through vehicles like licensing and franchising agreements. While international business opens opportunities for increased trade and specialization, it also introduces higher risks related to foreign exchange rates, legal compliance in multiple jurisdictions, and longer timeframes. Proper analysis of political, economic, cultural and legal factors is needed before a company establishes foreign operations.
The document discusses country risk analysis. It defines country risk as risks arising from changes in a country's business environment that may negatively impact profits or asset values. It identifies several political, economic, financial, and subjective factors that contribute to country risk, such as currency controls, civil unrest, economic growth rates, corruption, and consumer attitudes. The document also discusses methods for assessing country risk like checklists, the Delphi technique, and quantitative analysis. It provides examples of how country risk ratings can inform investment decisions and be incorporated into capital budgeting.
Advantages and disadvantages of INTERNATIONAL BUSINESSDr. Ravneet Kaur
The document outlines several advantages and disadvantages of international business. It notes that international business allows countries to earn foreign currency through exports, specialize production, make optimal use of resources, and increase standards of living. It also benefits consumers through greater product choice and availability. However, it can also negatively impact economies through increased competition, potential exploitation of developing countries, and cultural influence.
The document discusses Eurocurrency and the Eurodollar market. It defines Eurocurrency as currency deposited by governments or corporations in banks outside their home market, such as US dollars deposited in a London bank. The Eurodollar market refers specifically to US dollar deposits held in banks outside the US. The market originated in the late 1950s when European banks began accepting dollar deposits. It grew due to less regulation than in the US market, allowing for higher interest rates and more banking competition internationally. However, the unregulated nature of offshore banking also carries greater risks of bank failures and foreign exchange volatility for borrowers.
Globalisation and strategies for going globalMayanka Singh
This document discusses various strategies for companies to go global, including exporting, licensing/franchising, management contracts, contract manufacturing, and turnkey contracts. It provides details on each strategy, such as licensing involving paying fees to use intellectual property, and management contracts separating ownership from operation of a business. Globalization is said to have benefits like raising living standards and market expansion, but also challenges like job losses in some countries.
International financial management involves managing finances across borders to maximize shareholder wealth. It emerged as countries liberalized and opened their economies. Managing international finances differs from domestic finances in areas like foreign exchange risk, political risk, market imperfections, and enhanced opportunities. Companies can raise capital abroad through licensing, franchising, subsidiaries, strategic alliances, and exports. Proper international financial management helps organizations operate efficiently in global markets.
Foreign exchange exposure is the risk associated with activities involving currencies other than a firm's home currency. It is the risk that foreign currencies may fluctuate in a way that financially harms the firm. There are three main types of foreign exchange exposure: transaction, economic, and translation. Firms can assess and manage their exposures through hedging strategies like financial contracts and operational techniques. Whether to hedge depends on factors like a firm's currency forecasts and focus on its core business versus currency speculation.
Foreign Direct Investment - FDI - International Business - Manu Melwin Joymanumelwin
This document discusses foreign direct investment (FDI) and how governments encourage and discourage it. It defines FDI and the main types - greenfield and brownfield investments. Governments encourage FDI to create jobs, expand knowledge, and boost economic growth. They provide financial incentives, improve infrastructure, streamline regulations, invest in education, and ensure stability. However, some governments restrict FDI through ownership limits and taxes to maintain control of key industries or persuade companies to invest domestically instead of abroad.
This document discusses various modes of international market entry for companies looking to expand globally. It describes exporting, both direct and indirect; offshore services; international licensing; franchising; turnkey projects; contract manufacturing; and management contracts. For each entry mode, it provides brief definitions and discusses their pros and cons. Management contracts, turnkey projects, and contract manufacturing are referred to as "specialized entry modes" since they involve shorter-term investments and less financial risk than other options. The document aims to help companies understand the different options available for entering international markets.
This document summarizes the types and motivations of foreign direct investment. It discusses inward and outward foreign direct investment, and the factors that encourage and restrict them. It also describes different types of foreign direct investments like greenfield investments, mergers and acquisitions, horizontal and vertical foreign direct investments. Finally, it outlines the main motivations for foreign direct investment, including resource seeking, market seeking, efficiency seeking and strategic asset seeking.
International business finance Foreign Exchange MarketsMeghna Baid
This study examines factors that influence consumers' intentions to purchase foreign exchange products online. It analyzes how internet usage, website content, context, infrastructure, and trust impact purchase intention. The results show that trust in brokers and the market, positive website context design, and reliable infrastructure positively correlate with purchase intention. Website content was found to have less influence. Overall, the study aims to help foreign exchange companies better understand what drives online purchasing and loyalty in order to improve their services and attract more investors.
Governments intervene in international trade for both political and economic reasons. Politically, they aim to protect domestic industries and jobs from foreign competition. Economically, they argue for strategies like protecting infant industries. Governments use various tools for intervention, such as tariffs, subsidies, quotas, and anti-dumping policies. These can benefit domestic producers but hurt consumers and overall economic efficiency. The World Trade Organization was created to liberalize trade and enforce global trade rules, but negotiations continue on further reducing barriers to trade.
Foreign exchange risk, also known as currency risk, refers to the financial risk posed by unexpected changes in exchange rates. It affects investors and businesses involved in international trade or foreign investments. There are three main types of foreign exchange exposure: transaction, economic, and translation. Transaction exposure involves existing foreign currency transactions, economic exposure impacts future cash flows and firm value, and translation exposure affects financial reporting due to exchange rate movements between periods. Companies can use hedging strategies like forward contracts, options, and money market operations to eliminate or reduce foreign exchange risk.
This document provides an overview of Chapter 7 from the textbook "International Business 7e" by Charles W.L. Hill. The chapter discusses foreign direct investment (FDI), including definitions of key terms like FDI flows and stocks. It also summarizes trends in FDI globally and by region over time. The chapter then examines theories for why firms undertake FDI rather than exporting, and looks at the pattern and sources of FDI flows between countries. It concludes by discussing political views on FDI and weighing the benefits and costs of inward FDI for host countries.
The document discusses foreign direct investment (FDI), including how FDI occurs when a firm invests directly in new facilities abroad. It has increased significantly in recent decades as firms undertake greenfield investments or acquisitions in foreign countries. Theories explore why firms choose FDI over alternatives and the factors influencing the pattern of FDI flows between countries.
The document provides an overview of chapters 8 and 9 from a textbook on business in today's global environment. Chapter 8 discusses foreign direct investment (FDI), including what FDI is, patterns of FDI flows and stocks, reasons why firms choose FDI over exporting or licensing, how governments and international institutions influence FDI, and implications for managers. Key topics covered include the definition of FDI, trends showing increasing FDI globally and among developing countries, and theories for why firms undertake FDI.
This document discusses foreign direct investment (FDI). It defines FDI as when a firm invests directly in new facilities in a foreign country to produce and/or market goods. Both the flow and stock of global FDI have increased significantly over the last 30 years. While most FDI still targets developed nations, emerging markets like China and countries in Asia and Latin America are attracting more investment. FDI benefits both home and host countries by transferring resources like capital, jobs, and skills across borders.
The document discusses foreign direct investment (FDI), which occurs when a firm invests directly in facilities in a foreign country. FDI has increased significantly over the past 30 years and can take the form of greenfield investments or acquisitions. Key factors driving the growth of FDI include avoiding trade barriers, deregulation in many countries, and the globalization of markets. There are both benefits and costs of FDI for home and host countries to consider. Government policies can influence FDI flows into and out of their countries through various incentives and restrictions.
IBM Lecture Foreign Direct Investment and Political Economy of FDMuhammad Muavia Khan
The document discusses the case of CEMEX, a Mexican cement company that transformed into the third largest cement company in the world through foreign direct investment. It acquired inefficient cement companies in developing countries, transferring skills in customer service, marketing, IT and production. CEMEX also acquired British cement company RMC, which had operations in 22 European nations. The document then defines and discusses different forms of foreign direct investment, including greenfield investment and acquisitions, and their economic rationale and impacts on host countries.
Foreign Direct Invectments in Developing countriesMunashe Kamwemba
the presentation is focusing of developing countries and the impact of Direct Foreign investments as well as factors that influence and promote investment in the area .
Foreign direct investment (FDI) occurs when a firm establishes foreign business operations or acquires foreign firms. Most cross-border investment is acquisitions rather than building new facilities. Firms prefer acquisitions because they are quicker to execute and allow firms to gain existing assets rather than building them. Both the flows and stocks of global FDI have significantly increased in recent decades due to factors like economic liberalization and globalization. Developed countries are typically the largest sources of outward FDI while developing regions are large recipients of inward FDI. FDI has benefits and costs for both host and home countries.
The document discusses the relationship between foreign direct investment and economic growth, examining different perspectives on this relationship from radical views to pragmatic nationalism to free market views. It also explores regional development implications of foreign direct investment and debates the relationship between legal institutions and foreign investment flows.
This document discusses foreign direct investment (FDI). It defines FDI as investment made to establish control or influence over decision making in a foreign business. FDI can take the form of greenfield investment, mergers and acquisitions, or brownfield investment. Theories discussed include the product cycle theory and theories based on political/economic factors or a country's location advantages. The document also outlines benefits and costs of FDI for home and host countries, and how governments can influence FDI flows.
FDI occurs when a firm invests directly in new facilities in a foreign country. There are two main forms of FDI: equity capital and reinvested earnings. Firms prefer FDI over exporting or licensing for several reasons, including limitations of exporting, licensing, and strategic considerations. FDI flows are influenced by factors like the product life cycle, location-specific advantages, and knowledge spillovers. While FDI can benefit host countries through jobs and resources, it also presents costs like impacts on competition and perceived loss of sovereignty. Colombia received over $8.5 billion in FDI in 2009 and over $9.48 billion in 2010, with gold mining attracting over $4.5 billion between 2010-2020
Review of FDI Policies in India and China: Analysis and InterpretationVandanaSharma356
Foreign Direct Investment (FDI) is a wide word that encompasses any long-term investment made in the host nation by a non-resident enterprise. Typically, the investment is undertaken over a lengthy period of time with the purpose of maximizing the host nation's advantages, such as superior (and cheaper) resources, consumer market access, or direct access to the host country. All talent improves efficiency. This long-term cooperation will benefit both the investor and the host nation. If the investor makes the same investment in his own nation, he will obtain a larger return, but the host country will profit by boosting the transfer of knowledge or technology to its workforce, putting more pressure on his local business to compete. Foreign firm that can develop the sector as a whole or serve as an example for other companies thinking about investing in the host nation.
This document discusses foreign direct investment (FDI). It defines FDI as investment made by transnational corporations to increase international business, usually through establishing new production facilities abroad. Businesses and governments engage in FDI to expand markets and acquire foreign resources. There are various methods for firms to invest abroad, like joint ventures or mergers and acquisitions, which are less risky than direct FDI. The document also discusses factors that attract FDI to countries, like market size, infrastructure, and political stability. It outlines sectors where FDI is permitted and not permitted in India.
Brad faber-outline foreign direct investmentdk1089
Foreign direct investment (FDI) involves investing in or gaining control of businesses in other countries. While FDI can promote economic growth in host countries by increasing investment, it also presents some risks like reducing competition and national autonomy. Countries take different approaches to FDI, from restricting it to promote domestic industry to strategically courting FDI in certain sectors. The impact of FDI on regional development is complex, as it can both intensify economic inequalities while also spreading technology and skills.
International investment and foreign direct investment play an important role in the global economy. There are different types of foreign investment such as foreign direct investment, portfolio investment, and investment in depository receipts. Foreign direct investment provides benefits like increased investment, technology transfer, and competition but it also faces criticism like undermining economic autonomy. Factors like natural resources, market size, production efficiency, interest rates, and government policies affect international investment flows. India moved from a restrictive policy on foreign investment pre-1991 to a more liberalized policy with automatic approval for foreign investment in many industries.
Foreign direct investment (FDI) in India was introduced in 1991 under the Foreign Exchange Management Act. It has since become a major political issue, with debates around further liberalizing FDI rules. While FDI into India has increased substantially, proposals to allow more foreign ownership in multi-brand retail met resistance from political parties concerned about effects on small retailers. The policy has been delayed and remains a contentious topic in Indian politics and economics.
This document discusses foreign direct investment (FDI), including why it has increased globally, different types of FDI, factors influencing FDI decisions, and costs and benefits of FDI for both host and source countries. Key points covered include that FDI has grown faster than global trade in recent decades due to factors like globalization and economic liberalization. FDI can take various forms like horizontal, vertical, or strategic asset-seeking investments. John Dunning's eclectic paradigm explains FDI decisions as being influenced by ownership, location, and internalization advantages. Governments pursue different policies toward FDI based on ideological views ranging from free market to pragmatic nationalism.
Foreign direct investment (FDI) has been growing faster than global trade and output. There are several reasons why firms choose FDI over alternatives like exporting. FDI allows firms to have direct control over foreign operations, protect valuable knowledge, and respond quickly to competitors. Location advantages and a firm's ownership advantages also influence FDI decisions. While FDI can benefit host countries through jobs and development, it also raises issues around national sovereignty. Governments must consider both the costs and benefits of FDI policies.
The document provides an overview of quantitative analysis. It discusses that quantitative analysis is the systematic study of an organization's structure, characteristics, functions, and relationships to provide executives with a quantitative basis for decision making. The characteristics of quantitative analysis include a focus on decision making, applying a scientific approach, using an interdisciplinary team, and applying formal mathematical models. The quantitative analysis process involves defining the problem, developing a model, acquiring data, developing a solution, testing the solution, and validating the model. Common tools used in quantitative analysis include linear programming, statistical techniques, decision tables, decision trees, game theory, forecasting, and mathematical programming.
This document outlines five methods for managing conflict: accommodation, compromise, avoidance, competition, and collaboration. Accommodation is a lose/win approach where one party forfeits their position. Compromise is a win/lose-win/lose approach where all parties gain and lose through negotiation. Avoidance is a lose/lose approach where issues remain unresolved. Competition is a win/lose approach where one party attempts to dominate. Collaboration is a win/win approach that requires trust and understanding between all parties. Each approach is best suited to different conflict situations.
This document summarizes 10 key human capital trends from 2017 to 2020 according to annual surveys. The trends include the changing nature of careers, learning, talent acquisition, employee experience, performance management, leadership, digital HR, people analytics, diversity and inclusion, and the future of work involving new technologies. Organizations are shifting from hierarchies to empowered networks and teams and redesigning jobs to leverage both human and technological capabilities. Learning is becoming more continuous, personalized and integrated with work. Well-being, the hyper-connected workplace, data privacy, and social impact are also emerging as important issues.
Define conflict and conflict behavior in organizations
Distinguish between functional and dysfunctional conflict
Understand different levels and types of conflict in organizations
Analyze conflict episodes and the linkages among them
Explain why conflict arises, and identify the types and sources of conflict in organizations.
Describe conflict management strategies that managers can use to resolve conflict effectively.
Understand the nature of negotiation and why integrative bargaining is more effective than distributive negotiation.
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This document discusses conflict management in an organizational context. It begins by defining conflict and outlining learning objectives around understanding conflict, dealing with typical conflicts that arise, and developing skills to resolve conflicts. It then presents a case study about the performance of three typists, Anabia, Sonia and Tania, and asks the reader to evaluate their performance. Additional details provided about each typist may affect the reader's evaluation. The document goes on to discuss causes of conflicts, effects of conflicts in organizations, different approaches to dealing with conflicts, and steps that can be taken to prevent and resolve conflicts. It concludes by noting that while conflict is inevitable and not entirely negative, poorly managed conflicts can have counterproductive results while well-managed
Differences between legal compliances and managing diversityJubayer Alam Shoikat
The document provides guidelines for developing an organizational code of ethics or code of conduct. It outlines several key components that should be addressed in a code, including personal integrity, compliance with laws, political contributions, confidential information, conflicts of interest, financial records, employment policies, securities transactions, use of company assets, gifts and entertainment, environmental issues, and compliance/enforcement. It stresses that codes are most effective when communicated, modeled by leadership, and enforced with accountability.
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The document discusses the five generations of computers from the 1940s to present. It provides details on the key hardware technologies, software technologies, and characteristics of each generation. The first generation used vacuum tubes and were very large, unreliable, and costly. The second generation introduced transistors, magnetic storage, and batch operating systems. The third generation saw the rise of integrated circuits, timesharing operating systems, and standard programming languages. The fourth generation brought microprocessors, PCs, networks, and GUIs. The fifth generation includes powerful desktops, notebooks, servers, supercomputers, and technologies like the internet, multimedia, and Java.
International Business basic concept of international business
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Cleades Robinson, a respected leader in Philadelphia's police force, is known for his diplomatic and tactful approach, fostering a strong community rapport.
MUTUAL FUNDS (ICICI Prudential Mutual Fund) BY JAMES RODRIGUESWilliamRodrigues148
Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are managed by professional portfolio managers or investment companies who make investment decisions on behalf of the fund's investors.
The E-Way Bill revolutionizes logistics by digitizing the documentation of goods transport, ensuring transparency, tax compliance, and streamlined processes. This mandatory, electronic system reduces delays, enhances accountability, and combats tax evasion, benefiting businesses and authorities alike. Embrace the E-Way Bill for efficient, reliable transportation operations.
2. 7-2
Introduction
Foreign direct investment (FDI) occurs when a firm
invests directly in new facilities to produce and/or market in
a foreign country
Once a firm undertakes FDI it becomes a multinational
enterprise
FDI can be:
greenfield investments - the establishment of a wholly
new operation in a foreign country
acquisitions or mergers with existing firms in the foreign
country
3. 7-3
Foreign Direct Investment
In The World Economy
The flow of FDI refers to the amount of FDI undertaken
over a given time period
The stock of FDI refers to the total accumulated value of
foreign-owned assets at a given time
Outflows of FDI are the flows of FDI out of a country
Inflows of FDI are the flows of FDI into a country
4. 7-4
Trends In FDI
There has been a marked increase in both the flow and
stock of FDI in the world economy over the last 30 years
FDI has grown more rapidly than world trade and world
output because:
firms still fear the threat of protectionism
the general shift toward democratic political institutions
and free market economies has encouraged FDI
the globalization of the world economy is having a
positive impact on the volume of FDI as firms undertake
FDI to ensure they have a significant presence in many
regions of the world
5. 7-5
The Direction Of FDI
Most FDI has historically been directed at the developed
nations of the world, with the United States being a favorite
target
FDI inflows have remained high during the early 2000s
for the United States, and also for the European Union
South, East, and Southeast Asia, and particularly China,
are now seeing an increase of FDI inflows
Latin America is also emerging as an important region for
FDI
6. 7-6
The Direction Of FDI
Figure 7.3: FDI Inflows by Region ($ billion), 1995-2006
7. 7-7
The Direction Of FDI
Gross fixed capital formation summarizes the total
amount of capital invested in factories, stores, office
buildings, and the like
All else being equal, the greater the capital investment in
an economy, the more favorable its future prospects are
likely to be
So, FDI can be seen as an important source of capital
investment and a determinant of the future growth rate of
an economy
8. 7-8
The Direction Of FDI
Figure 7.4: Inward FDI as a % of Gross Fixed Capital
Formation 1992-2005
9. 7-9
The Source Of FDI
Since World War II, the U.S. has been the largest source
country for FDI
The United Kingdom, the Netherlands, France, Germany,
and Japan are other important source countries
10. 7-10
The Source Of FDI
Figure 7.5: Cumulative FDI Outflows ($ billions), 1998-2005
11. 7-11
The Form Of FDI: Acquisitions
Versus Greenfield Investments
Most cross-border investment is in the form of mergers
and acquisitions rather than greenfield investments
Firms prefer to acquire existing assets because:
mergers and acquisitions are quicker to execute than
greenfield investments
it is easier and perhaps less risky for a firm to acquire
desired assets than build them from the ground up
firms believe that they can increase the efficiency of an
acquired unit by transferring capital, technology, or
management skills
12. 7-12
The Shift To Services
FDI is shifting away from extractive industries and
manufacturing, and towards services
The shift to services is being driven by:
the general move in many developed countries toward
services
the fact that many services need to be produced where
they are consumed
a liberalization of policies governing FDI in services
the rise of Internet-based global telecommunications
networks
13. 7-13
Theories Of Foreign Direct Investment
Why do firms invest rather than use exporting or licensing
to enter foreign markets?
Why do firms from the same industry undertake FDI at
the same time?
How can the pattern of foreign direct investment flows be
explained?
14. 7-14
Why Foreign Direct Investment?
Why do firms choose FDI instead of:
exporting - producing goods at home and then shipping
them to the receiving country for sale
or
licensing - granting a foreign entity the right to produce
and sell the firm’s product in return for a royalty fee on
every unit that the foreign entity sells
15. 7-15
Why Foreign Direct Investment?
An export strategy can be constrained by transportation
costs and trade barriers
Foreign direct investment may be undertaken as a
response to actual or threatened trade barriers such as
import tariffs or quotas
16. 7-16
Why Foreign Direct Investment?
Internalization theory (also known as market imperfections
theory) suggests that licensing has three major drawbacks:
licensing may result in a firm’s giving away valuable
technological know-how to a potential foreign competitor
licensing does not give a firm the tight control over
manufacturing, marketing, and strategy in a foreign country
that may be required to maximize its profitability
a problem arises with licensing when the firm’s
competitive advantage is based not so much on its
products as on the management, marketing, and
manufacturing capabilities that produce those products
17. 7-17
The Pattern Of Foreign
Direct Investment
Firms in the same industry often undertake foreign direct
investment around the same time and tend to direct their
investment activities towards certain locations
Knickerbocker looked at the relationship between FDI
and rivalry in oligopolistic industries (industries composed
of a limited number of large firms) and suggested that FDI
flows are a reflection of strategic rivalry between firms in
the global marketplace
The theory can be extended to embrace the concept of
multipoint competition (when two or more enterprises
encounter each other in different regional markets, national
markets, or industries)
18. 7-18
The Pattern Of Foreign
Direct Investment
Vernon argued that firms undertake FDI at particular
stages in the life cycle of a product they have pioneered
Firms invest in other advanced countries when local
demand in those countries grows large enough to support
local production, and then shift production to low-cost
developing countries when product standardization and
market saturation give rise to price competition and cost
pressures
Vernon fails to explain why it is profitable for firms to
undertake FDI rather than continuing to export from home
base, or licensing a foreign firm
19. 7-19
The Pattern Of Foreign
Direct Investment
According to the eclectic paradigm, in addition to the
various factors discussed earlier, it is important to consider:
location-specific advantages - that arise from using
resource endowments or assets that are tied to a particular
location and that a firm finds valuable to combine with its
own unique assets
and
externalities - knowledge spillovers that occur when
companies in the same industry locate in the same area
20. 7-20
Political Ideology And
Foreign Direct Investment
Ideology toward FDI ranges from a radical stance that is
hostile to all FDI to the non-interventionist principle of free
market economies
Between these two extremes is an approach that might
be called pragmatic nationalism
21. 7-21
The Radical View
The radical view traces its roots to Marxist political and
economic theory
It argues that the MNE is an instrument of imperialist
domination and a tool for exploiting host countries to the
exclusive benefit of their capitalist-imperialist home
countries
22. 7-22
The Free Market View
According to the free market view, international
production should be distributed among countries
according to the theory of comparative advantage
The free market view has been embraced by a number of
advanced and developing nations, including the United
States, Britain, Chile, and Hong Kong
23. 7-23
Pragmatic Nationalism
Pragmatic nationalism suggests that FDI has both
benefits, such as inflows of capital, technology, skills and
jobs, and costs, such as repatriation of profits to the home
country and a negative balance of payments effect
According to this view, FDI should be allowed only if the
benefits outweigh the costs
24. 7-24
Shifting Ideology
Recently, there has been a strong shift toward the free
market stance creating:
a surge in FDI worldwide
an increase in the volume of FDI in countries with newly
liberalized regimes
25. 7-25
Benefits And Costs Of FDI
Government policy is often shaped by a consideration of
the costs and benefits of FDI
26. 7-26
Host-Country Benefits
There are four main benefits of inward FDI for a host
country:
1. resource transfer effects - FDI can make a positive
contribution to a host economy by supplying capital,
technology, and management resources that would
otherwise not be available
2. employment effects - FDI can bring jobs to a host
country that would otherwise not be created there
27. 7-27
Host-Country Benefits
3. balance of payments effects - a country’s balance-of-
payments account is a record of a country’s payments to
and receipts from other countries.
The current account is a record of a country’s export and
import of goods and services
Governments typically prefer to see a current account
surplus than a deficit
FDI can help a country to achieve a current account
surplus if the FDI is a substitute for imports of goods and
services, and if the MNE uses a foreign subsidiary to export
goods and services to other countries
28. 7-28
Host-Country Benefits
4. effects on competition and economic growth - FDI in the
form of greenfield investment increases the level of
competition in a market, driving down prices and improving
the welfare of consumers
Increased competition can lead to increased productivity
growth, product and process innovation, and greater
economic growth
29. 7-29
Host-Country Costs
Inward FDI has three main costs:
1. the possible adverse effects of FDI on competition within
the host nation
subsidiaries of foreign MNEs may have greater economic
power than indigenous competitors because they may be
part of a larger international organization
30. 7-30
Host-Country Costs
2. adverse effects on the balance of payments
with the initial capital inflows that come with FDI must be
the subsequent outflow of capital as the foreign subsidiary
repatriates earnings to its parent country
when a foreign subsidiary imports a substantial number
of its inputs from abroad, there is a debit on the current
account of the host country’s balance of payments
31. 7-31
Host-Country Costs
3. the perceived loss of national sovereignty and autonomy
key decisions that can affect the host country’s economy
will be made by a foreign parent that has no real
commitment to the host country, and over which the host
country’s government has no real control
32. 7-32
Home-Country Benefits
The benefits of FDI for the home country include:
the effect on the capital account of the home country’s
balance of payments from the inward flow of foreign
earnings
the employment effects that arise from outward FDI
the gains from learning valuable skills from foreign
markets that can subsequently be transferred back to the
home country
33. 7-33
Home-Country Costs
The home country’s balance of payments can suffer:
from the initial capital outflow required to finance the FDI
if the purpose of the FDI is to serve the home market
from a low cost labor location
if the FDI is a substitute for direct exports
Employment may also be negatively affected if the FDI is
a substitute for domestic production
34. 7-34
International Trade Theory
And FDI
International trade theory suggests that home country
concerns about the negative economic effects of offshore
production (FDI undertaken to serve the home market) may
not be valid
36. 7-36
Home-Country Policies
Governments can encourage and restrict FDI:
To encourage outward FDI, many nations now have
government-backed insurance programs to cover major
types of foreign investment risk
To restrict outward FDI, most countries, including the
United States, limit capital outflows, manipulate tax rules,
or outright prohibit FDI
37. 7-37
Host-Country Policies
Governments can encourage or restrict inward FDI
To encourage inward FDI, governments offer incentives
to foreign firms to invest in their countries
Incentives are motivated by a desire to gain from the
resource-transfer and employment effects of FDI, and to
capture FDI away from other potential host countries
To restrict inward FDI, governments use ownership
restraints and performance requirements
38. 7-38
International Institutions And
The Liberalization Of FDI
Until the 1990s, there was no consistent involvement by
multinational institutions in the governing of FDI
Today, the World Trade Organization is changing this by
trying to establish a universal set of rules designed to
promote the liberalization of FDI
39. 7-39
Implications For Managers
What are the implications of foreign direct investment for
managers?
Managers need to consider what trade theory implies,
and the link between government policy and FDI
40. 7-40
The Theory Of FDI
The direction of FDI can be explained through the
location-specific advantages argument associated with
John Dunning
However, it does not explain why FDI is preferable to
exporting or licensing
41. 7-41
Government Policy
A host government’s attitude toward FDI is an important
variable in decisions about where to locate foreign
production facilities and where to make a foreign direct
investment