Essays on Concept of Foreign Direct Investment, Trends and Patterns of FDI Coursework

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The paper " Concept of Foreign Direct Investment, Trends and Patterns of FDI" is a great example of a macro and microeconomics coursework. The business has entered the era of the one-world market. Increasingly, companies are going overseas to attain sales and profits unavailable to them in their home markets. The emergency of international firms is perceived to be the latest developments in the last decade, resulting from globalization. The key indicator of Multinational Enterprise (MNE) activity used to analyze the location decision is Foreign Direct Investment (FDI), defined as “ investment in which the investor acquires a substantial controlling interest in a foreign country” (Bende‐Nabende, 2002).

In other words, foreign direct investment is a flow of long-term capital based on long-term profit considerations and a significant degree of influence by the investor on the management of the enterprise. It is this particular element of influence and control that differentiate directly from portfolio investment and other types of forms of international capital flows. Since FDI is linked to MNE activity, it is used interchangeably with MNEs in much of the economics literature. In line with the growing impact of MNEs, global FDI inflows increased substantially in the last decade.

As a result, every firm, including those with purely domestic operations, is facing increased pressure from foreign competitors. Overseas ventures have been transformed, and many firms are going international to market themselves and widen the market niches. This is made easier through joint ventures with existing firms in foreign countries or the total takeover of subsidiary firms (Bende‐Nabende, 2002). According to Yasin (2005), firms have progressively developed their business activities because of easy in access of relevant information and invitation from governments of small nations that want to boost their economic growth and maintain their competitive edge.

Most of the multinational firms from the Europe countries, Japan and the United States have been prominent in establishing up the bigger joint-venture firms in parts of Africa and Asia and importantly they have enabled advanced technology transfer. Trends and Patterns of Foreign Direct Investment The opportunities available to a particular country in mobilising foreign direct investment in economic growth and development depend on relevant typology characteristics and the investment surroundings of the country and the changing pattern of international production in the global context.

The worldwide pattern of FDI incorporates resource-based factors, labour-intensive aspects and integrated processes and global production systems. Foreign direct investment started off from the decision of an MNE to relocate part of its activities in a selected host country. This decision is underpinned by the desire to reap benefits from particular benefits like the existence of new technology, management expertise and marketing know-how which may not easily be acquired from market involvement of unrelated firms. Majority of emerging markets, especially in developing nations, for instance, Asia and Africa stand to benefit from FDI.

Asiedu (2006) argues that African nations stand to benefit to attract foreign direct investment that is not founded on local resources or else the extent of marketplaces, in improving the local business. The use of foreign direct investment that does not result from magnitude of the marketplace and the existing natural resources in the host state may serve as a pointer of the business atmosphere for foreign domestic investment (Artadi and Sala-i-Martin, 2004).

As such, the FDI growth rate encompasses how trade openness can be used to improve the business atmosphere.

BIBLIOGRAPHY

1. Artadi, E.V. and Sala-i-Martin, X. (2004). “The economic tragedy of the twentieth century: growth in Africa”, in World Economic Forum. The Africa Competitiveness Report. Geneva: WEF

2. Asiedu, E. (2006). Foreign Direct Investment in Africa: World Economy, Vol. 29(1), pp. 63-77

3. Basu, A., and Srinivisan, K. (2002) “Foreign Direct Investment in Africa-Some Case Studies,” IMF Working Paper No.61. IMF: Washington, DC.

4. Bende‐Nabende, A. (2002). “Foreign Direct Investment Determinants in Sub‐Saharan Africa: A Co‐Integration Analysis,” Economics Bulletin 6 (4): 1‐19.

5. Chia, S. Y. (1999). “Trade, foreign direct investment and economic development of Southeast Asia”, The Pacific Review, 12 (2): 249-270.

6. China, Ministry of Commerce (MOFCOM) (2006). China Foreign Investment Report 2006, Beijing: MOFCOM).

7. De Melo, L.R. (1997) “Foreign Direct Investment and Growth in Developing Countries and Growth: A Selective Survey,” Journal of Development Studies 34 (1): 1-34.

8. Demurger, S. (2001) “Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?” Journal of Comparative Economics 29 (1):95‐117.

9. Dunning, J.H. (2001). “The Eclectic (OLI) Paradigm of International Production: Past, Present and Future,” International Journal of the Economics of Business 8(2): 173-90.

10. Dupasquier, C. and Osakwe, P. (2006). “Foreign Direct Investment in Africa: Performance, Challenges, and Responsabilities,” Journal of Asian Economics 17 (2): 241‐60.

11. Lemi, A. and Asefa. S. (2003). “Foreign Direct Investment and Uncertainty: Empirical Evidence from Africa,” African Finance Journal 5 (1): 36‐67.

12. Morisset, J. (2000). “Foreign Direct Investment in Africa: Policies Also Matter,” Transnational Corporations 9 (2): 107‐25.

13. Ngowi, H. P. (2001). “Can Africa Increase Its Global Share of Foreign Direct Investment,” West Africa Review 2 (2): 1-9.

14. Rodrik, D. (2011). Growth Strategies, in Handbook of Economic Growth, eds. P. Aghion & S. Durlauf, Elsevier, North Holland, Chapter 14.

15. Tsang, E.K., (1998). Foreign direct investment in China: a consideration of some Strategic options, Journal of General Management 24(1), autumn: 15-35.

16. World Bank (2011). The East Asian Miracle: Economic Growth and Public Policy, Oxford University Press, New York.

17. Warner, M., (1997). Economic Reforms and Industrial relation in the People’s Republic Of China: an overview, Industrial relation Journal 26(4): 16180.

18. Yao, Y. and Yin, H. (2005). “Chinese outward investing firms: A Study for FIAS/IFC/MIGA”, Beijing: China Center for Economic Research.

19. Yasin, M. (2005). “Official Development Assistance and Foreign Direct Investment Flows to Sub‐Saharan Africa,” African Development Review 17 (1): 23‐40.

BIBLIOGRAPHY

1. Artadi, E.V. and Sala-i-Martin, X. (2004). “The economic tragedy of the twentieth century: growth in Africa”, in World Economic Forum. The Africa Competitiveness Report. Geneva: WEF

2. Asiedu, E. (2006). Foreign Direct Investment in Africa: World Economy, Vol. 29(1), pp. 63-77

3. Basu, A., and Srinivisan, K. (2002) “Foreign Direct Investment in Africa-Some Case Studies,” IMF Working Paper No.61. IMF: Washington, DC.

4. Bende‐Nabende, A. (2002). “Foreign Direct Investment Determinants in Sub‐Saharan Africa: A Co‐Integration Analysis,” Economics Bulletin 6 (4): 1‐19.

5. Chia, S. Y. (1999). “Trade, foreign direct investment and economic development of Southeast Asia”, The Pacific Review, 12 (2): 249-270.

6. China, Ministry of Commerce (MOFCOM) (2006). China Foreign Investment Report 2006, Beijing: MOFCOM).

7. De Melo, L.R. (1997) “Foreign Direct Investment and Growth in Developing Countries and Growth: A Selective Survey,” Journal of Development Studies 34 (1): 1-34.

8. Demurger, S. (2001) “Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?” Journal of Comparative Economics 29 (1):95‐117.

9. Dunning, J.H. (2001). “The Eclectic (OLI) Paradigm of International Production: Past, Present and Future,” International Journal of the Economics of Business 8(2): 173-90.

10. Dupasquier, C. and Osakwe, P. (2006). “Foreign Direct Investment in Africa: Performance, Challenges, and Responsabilities,” Journal of Asian Economics 17 (2): 241‐60.

11. Lemi, A. and Asefa. S. (2003). “Foreign Direct Investment and Uncertainty: Empirical Evidence from Africa,” African Finance Journal 5 (1): 36‐67.

12. Morisset, J. (2000). “Foreign Direct Investment in Africa: Policies Also Matter,” Transnational Corporations 9 (2): 107‐25.

13. Ngowi, H. P. (2001). “Can Africa Increase Its Global Share of Foreign Direct Investment,” West Africa Review 2 (2): 1-9.

14. Rodrik, D. (2011). Growth Strategies, in Handbook of Economic Growth, eds. P. Aghion & S. Durlauf, Elsevier, North Holland, Chapter 14.

15. Tsang, E.K., (1998). Foreign direct investment in China: a consideration of some Strategic options, Journal of General Management 24(1), autumn: 15-35.

16. World Bank (2011). The East Asian Miracle: Economic Growth and Public Policy, Oxford University Press, New York.

17. Warner, M., (1997). Economic Reforms and Industrial relation in the People’s Republic Of China: an overview, Industrial relation Journal 26(4): 16180.

18. Yao, Y. and Yin, H. (2005). “Chinese outward investing firms: A Study for FIAS/IFC/MIGA”, Beijing: China Center for Economic Research.

19. Yasin, M. (2005). “Official Development Assistance and Foreign Direct Investment Flows to Sub‐Saharan Africa,” African Development Review 17 (1): 23‐40.

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