International financial markets IP 1 - Assignment Example

This paper is an attempt to look into the differences that exist in two countries where Acme Corporation is considering establishing a Greenfield investment. These two countries are the United Kingdom and Nigeria. Well, it must be remembered that these two countries are totally different in several aspects that can really affect the decision of the corporation to venture into their markets. The UK is a member of the European Commission and is generally a developed economy with good and well managed sectors.

On the other hand, Nigeria is one of the largest economies in Africa with a very large consumer population that drives economic growth. Trade and economic policies The UK prractices an open economy where trade liberalization and competition for free trade is highly cherished and encouraged. Any business is able to trade freely and invest competitively without any unnecessary restrictions from the government. One of the greatest concerns of the government here is to maximize the opportunities that exist for international trade in order to economically benefit the country.

Well, this is after the recognition that trade enables countries to specialize in activities that enable them to fully explore and exploit their resources and strengths. This open economy system has enabled the UK to experience high economic growth rates over the years especially in the post-war era. The policy has also strengthened the UK’s consumer markert as corporations and businesses strive to stay competitive amid the challenges and realities of this age (Smith, 2010). Over the years the UK has been known as a haven of very favorable trade policies that enabled many of its firms go multinational.

Even though this attribute has slightly been lost over the years courtesy of very high interest rates and the global financial meltdown, the government through the Bank of England has incessantly been trying to bring down the interest rates and increase the money supply in the banking system with a view of restoring economic stability. Nevertheless it must be remembered that the trade policies in the UK are generally investor friendly and may not be much different from the US case. Nigeria is a developing economy grappling with the economic challenges that affect most countries in this category.

However, it is a booming economy driven by its productive oil sector coupled with a very high population that creates a lot of demand for consumer goods and services. Even though the federal government of Nigeria recognizes the benefits of trade liberalization and the need to open up the market for international competition, challenges have always been realized. Like in any other developing country, the infant industries have to be protected from the stiff competition posed by foreign corporations.

There also exists the common assumption that free trade can only exist under an ideal economic system which is always impossibility. Nigerian trade policies are driven under the auspices of the Structural Adjustment Program (SAP) that seeks to restore the economy of the country after several decades of economic instability that bedeviled the country (Olaloku, 2007). As such, the government has been trying to encourage capital inflows into the country through foreign direct investments. This is in a bid to reduce the country’s dependence on the oil sector by creating other sources of revenue.

However, the federal gover