The paper “ Attractiveness of Singapore & Mexico for Foreign Direct Investment” is an excellent example of a report on macro & microeconomics. With globalization, multinational corporations (MNCs) are seeking new markets outside their traditional home countries. This is normally attained through foreign direct investments- FDI (Borensztein, De Gregorio & Lee, 1998, p. 116). However, this has to be conducted with a caveat where a thorough analysis of macro factors is paramount so as to gain market intelligence on possible risks & possibly inform on competitive & marketing strategies (Peng & Nunes, 2007).
Australia is one of the countries with businesses that conduct export and foreign direct investment to other countries. Presently it has a stock of direct foreign investment abroad of $440.1billion by 2013 making it the 17th ranked country with most with companies investing abroad (Central Intelligence Agency, 2014a). Therefore it is imperative to have comparative analysis to be utilized by Australian firms on the costs and risks involved in selecting and developing international markets. Singapore as a nation traces its roots from 1819 as a British colony. At independence in 1959, the country joined the Malaysian Federation.
However, this did not last and in 1965 the country opted out of the arrangement (Lam, 2005, p. 398). The country has expanded nearly in all aspect and presently it has a population of million individuals with 72.2% being of Chinese ethnic group. Politically, the country has adopted parliamentary democracy with a unicameral parliamentary system. Economically, the country has adopted free-market economy. As per the 2013 estimates, the country had a GDP per capita (PPP) of $62, 400 making it the seventh-ranked globally.
Legally, the country has adopted the English Common law system. Technologically, the country has made significant growth in technological advancement in various sectors of the economy (Central Intelligence Agency, 2014b). For more descriptions on Singapore see appendix 1. On the other hand, Mexico a former colony of Spain gained her independence in 1810. It is estimated that by July 2014, the country will have an approximate population of 120, 286, 655. Politically, the country is a federal republic with a presidential system governance structure and bicameral parliament system where an election is done through universal suffrage.
Legally, the country has adopted a civil law system that has been highly influenced by US constitutional law theory. Economically, GDP per capita (PPP) of the country is $15, 600, therefore, ranking her 88th globally (Central Intelligence Agency, 2014c). The rationale for investing in Singapore is anchored on the political stability & rule of law in the country, strong economic indicators and thriving businesses (Central Intelligence Agency, 2014b). Finally, the investment decision also is aligned with the mutual interest of the country through its foreign policy that sought to bring Australia tie with the Asia-Pacific region closer (Rudd, 2008, p. 8 & 10; Capling, 2008, 611-618).
For Mexico, the rationale is anchored on a huge population that would easily offer a massive market. Secondly, the country has a stable economy with significant growth that offers an opportunity for other ventures (Central Intelligence Agency, 2014c). The purpose of this report is to conduct comparative analysis through Political, Economic, Social, Technological, Legal & Environmental analysis framework (PESTLE) so as to establish the attractiveness of Mexico and Singapore markets. The parameters to be analyzed within the context are political, economic, technological and legal factors.
This comparative analysis constitutes significant advice & market intelligence that can be used to guide Australian businesses wishing to engage in FDI on the costs and risks involved in selecting and developing international markets of Mexico and Singapore. Secondly, the report seeks to propose various recommendations to Austrade regarding which of the two countries is likely to present fewer risks and challenges to Australian businesses seeking to engage in FDI.
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