The Development of New Business and Private Practice in Developing Countries - Term Paper Example

Effect of policies of capital funding on the development of new businesses and private practices in developing countries Research Proposal Date:- Time:- Table of Contents ABSTRACT 1. BACKGROUND 2. RESEARCH DESIGN A. 1. Introduction 2. Need of research design 3. Types B. Exploratory Studies 1. Strenghths 3. METHODOLOGY A. Experimental method B. Research Method 1. Identification of the problem 2. Planning the research design 3. Selecting the research method Secondary data analysis Strengths Limitations C. Selection of sampling method 1. Probability Sampling Limitations 2. Systematic Random sampling method Strengths D. Steps in sampling process Limitations E. Cross sectional Survey F. Time Schedule 4. OVERVIEW OF THE PROBLEM 5. EXPECTED RESULTS REFERANCES 1 Abstract Inflow of capital from abroad is vital for the growth of a developing economy. The inflow of capital from abroad i.e capital funding may takes place either in the form of foreign aid or private investment. Nowadays capital funding become inevitable for new business and also in private sector of developing countries. The governments of respective countries has implemented a number of policies related to this .But The practice of imparting and accepting the fund always invites criticism as the opponents draw attention regarding imperfections, adverse results such as capital intensity of such funds, inappropriate technology ,the possible adverse on income distribution etc. Contrary to this as per the advocates of capital funding, it causes encouragement of the development of technologies, managerial expertise, and integration with the world economy, exports and higher growth. Since it is a very much controversial issue, my primary objective will be exploring the all the aspect of capital funding in new business and private sector in developing countries and also calculating possibility and to answer the hypothesis that effect of the various policies of capital funding on the development of new business and private practice in developing countries. Since this research problem needs an in depth study and it give rise to some insights to the magnitude of the capital funding I’ll formulate such research questions which may help me exploring the reality of the problem. The questions will be, 1. What is the magnitude of the effectiveness of the policies in developing countries, particularly in their economic growth? 2. Whether it effect positively or negatively on the development of new business and private practice? 2 3. What are aims of the particular government regarding the implementation of the respective policies? 4. Which are major countries who undertaken to impart funds to developing countries and whether there is particular motive behind such imparting funds? 5. How and what measures are taken by the developing countries to pay off such debts? 6. What are the relations of policies with strategies which may adopt by the new business and private practice for their successful enhancement? 7. How the governments implement such strategies? Chapter 1 Background Since it is highly necessary to gather accurate information for giving an ample scope to my research problem, I will approach autonomous and governmental bodies like Department for international development, office of foreign common wealth offices and HM treasury. Collecting data from such bodies will help me to draw a comprehensible data related to the effect of policies in the development of new business and private practice in developing countries. .Further it will help me to assess the different capital funding exists among different nations. By resorting to all these data I will formulate a time frame to calculate the importance of the policies of capital funding in developing countries. 3 Since the periodicals, Journals, publications etc. enumerate accurate information for my hypothetical and research questions; I will choose best of them. I consider the publications of The United States Agency for International development and Bureau of Economic Analysis US, Reports of UN conference on trade and development (UNCTAD) and various macroeconomic and development policies are best sources to collect more Statistical data. Moreover report of the Commission for Africa, (2005), Competition Law and Development Policies Paper presented at Zurich Seminar on Issues of International Competition Law (Correa, C., 1999), The breadth of intellectual property rights and their interface with competition law and policy: divergent paths to the same goal(Dumont, B., and Holmes, P., 1999) ,Competition Policy and the competitive process: Europe in the 1990s, (Hughes, A., 1992), The OECD Guidelines for Multinational Enterprises (OECD, 1986),Reports of Economist, (January 5-12, 1999)and International Monetary Fund (World Economic Outlook ,1998) Etc shall be helpful to explore the datas. Savings, investment and the corporation in the East Asian miracle and Asian capitalism and the financial crisis (Singh, A., 1998) ,Speech: Two principles for the next round, or how to bring developing countries in from the cold (Stiglitz, J., 1999) Report of World Bank on Global Economic Prospects and report of World Trade Organization (1999) on working group on the interaction between trade and competition policy to the general council are also constitutes good sources. 4 Chapter 3 Research Design Introduction Since the research design outlines actual research problem on hand and details the process for solving it I will have to mould my research design in such a way that there should be a minimum utilization of the time, money and effort. To achieve this I will rely to the following factors, 1. Identifying the exact research problem in hand: Since my research problem is related to the hypothetical question regarding effect of policies capital funding ,I will identify this by gathering data related to the different policies enacted by the different countries in order to enhancement of their business and private sector. 2. The objective of the research: As said in the previous chapter my objective will be to explore the subject regarding the policies of capital funding and through which I assess the effect of such policies. 3. The process of obtaining information: Since my work needs a comparative study through analysis of statistical data I will go for the secondary sources like information from governmental bodies, periodicals, publications etc. Need/Strength of research design 5 Research design is essential because it facilitates the smooth flow of various research processes. It is highly essential for planning research activities. The validity of research results is based on the initial research design. Types of research designs There are three types of research designs, exploratory studies which includes techniques like secondary data analysis, experience surveys, focus groups two stage design. Secondly, descriptive studies, thirdly casual studies under which casual relationship are studied. Here I will select the exploratory research since my research method is secondary data analysis .I will conduct it through qualitative techniques which is mostly used for document analysis. As the initial step in exploratory research is to look for the availability of secondary data, secondly I will do an experience surveys to gain additional knowledge on a particular subject area from experts in that field. In the case of my research I will have to approach different governmental bodies to collect data for more information under this survey method. Strength of Exploratory studies It helps in carrying out to make a problem suited to more precise investigation or to frame a working hypothesis from an operational perspective. Moreover it helps me in understanding and assessing the various issues of problems since my research is mainly based on the exploring the impact of policies of capital funding. A well formulated research design acts as abridge between the final objectives and the method of study to 6 achieve the objectives. One of the important merits of this is unless research design is developed the researcher can not have a clear idea about what he/she needs to do. It acts as a thorough guideline for the researcher. *************************** Chapter 4 Methodology Following are the methods which I will have to adopt in manipulating my research problem. Experimental hypothesis testing research Since I will have to test the hypothesized relationship or prediction, I will resort to an Experimental Hypothesis Testing Research by which the independent variable can be manipulated. This is the type of hypothesis testing research by which the validity of a hypothesis statement of a research problem can be checked. Research methods 1. Identification of the problem The dependant and independent variables which I have selected in my research are capital funding and its impact on the development of new business and private practice in developing countries. Since I’ve already identified the problem I will conduct 7 an exploratory research to define the problem. It will be helpful in evaluating existing studies on related topics, discussing the problem with experts, analyzing the situation etc. 2. Planning the research design I will plan my research design as given in the Chapter 2. 3 Selecting the research method Secondary data analysis My research is completely based on the hypothetical work of assumption of effect of policies of capital funding in developing countries and it involves the future happenings also. So I will take up secondary data studies as my research method. Because it will help me to analyses statistical data which is already collected by the autonomous and governmental bodies . Moreover I can refer external sources like periodicals, journals, governmental documents, governmental records, media sources and other publications by adopting this method. Strength of secondary data It is a cheaper and takes less time to gather. In situations where the actual problem in a research study cannot be defined or is defined in ambiguous way, the use of secondary data helps clear the confusion. Many a times it happens that precise data regarding the current research is already available as secondary data. Hence it might not be necessary to conduct a primary data collection exercise at all. 8 Limitations At times, no secondary data might be available or organization s holding such data may not be willing to make it accessible to outsiders. Sometimes data available might be irrelevant because of the changes in competitive situation, changing trends and other variable from the time to time the data was initially collected. 4. Selecting the sampling procedure Since my target population is so mentioned autonomous bodies and written scripts in the periodicals, journals and publications, I will make sampling of comparative data of all kind of impact of such policies of capital funding. Probability sampling I will select probability sampling because in this research work each and every members/elements in the population (countries) are calculable to arrive an accurate statistical data. Moreover, if the purpose of the research is to arrive at conclusions or make predictions, then the choice of a probabilistic sampling approach is desirable. Limitations In this regard I will always keep the limitations of probability of selection that it need not be equal for members/elements of the population. Probability sampling is of different methods like Simple random sampling, Systematic Sampling, Stratified random Sampling, Multistage cluster Sampling. Here I will select the systematic random sampling to conduct the probability sampling due to the following reasons. 9 Systematic random sampling method Since I will have to analyze all sample of the population to show that there exists of different policies of capital funding and also various types of effects, I will go for systematic random sampling of target population. Steps in sampling process For gathering consistent and accurate data I will resort to the following steps in conducting sampling process. 1. First I will define the target population in the terms of elements, sampling unit, extent, time frame etc. 2. Secondly I will specify the sample frame i.e the list of elements from which the sample may be drawn. 3. Thirdly I will specify the sampling unit. 4. Fourthly I will select the Sampling method. The method I‘ve chosen here is Probability method. 5. Fifthly I will determine the sample size and sample plan. 6 In last step I will carry out the actual selection of the sample. Limitation of sampling There is a chance of certain non potential data are included in the sampling frame and certain deserving data are rejected. This may lead to sampling error. Moreover there may be chance of inability of collection of data from the element actually selected into 10 sample. This may be due to the refusal of the element to cooperate or because of the language barrier or non availability of the element during the survey period. Cross sectional Surveys My survey will be in the form of cross-sectional surveys since it helps to gather information at a single point of a time. Moreover using this survey model, I can divide total target population, in this case the elements in the governmental bodies, periodicals, journals and publications, into various segments for e.g.; criminal sentence record, and decisions related various crime etc. I will collect all the data required from these segments using the sample method. Time schedule I need to have one month time to complete my research study as it requires meeting of officials ,reference of a great deal of scripts etc. ************************ Chapter 5 Overview of the problem In recent days the developing countries are moving towards to have a competition policy which is designed to take suitable level of their development and the long term objective of sustained economic growth. Such trend has become more crucial after the impending effect of privatization, deregulation and liberalization which have 11 occurred in the domestic economies of most developing countries. Hence most of the developing countries resort to the capital funding which seems to have contributed enormously to the growth of them, e.g. Thailand, Malaysia, Singapore, India, Brazil, Argentina etc. Moreover it has become a need to maintain the propensity of new business and private sector to bring in a steady growth of profits. It can be seen that most of the developed countries have created significant new relationship in developing to contribute a sustained economic development. For e.g., according to Bureau of economic analysis in 1960’s there was a total of $5.1 billion of US funds going to the developing world. But this is grown into 68% or more than $3.4 billion. Private capital increased from about 30% to 83.2% in 2005.So from this we can conclude that the developed countries are keener to invest in developing countries with regard to new business and private sector. But is has been argued that developing countries might enhance their attractiveness as location for FDI by pursuing policies that rise the level of local skills and build up human resource capabilities. Moreover the different developing countries are keen to have capital fund in the form of human capital. It happens mainly in the case of capital funding by the agencies and institutions of these particular developing countries only. Investment in human capital always boost the creation of innovation .So in most of the developing countries the requirement of enactment of policies highly urged to guarantee some standard for 12 rural citizens in the developing countries in terms of access and quality of education ,training etc because the fact that students are the best human capital. Undoubtedly, the government policies are playing important role in private sector development, by creating appropriate environment for private investment for a stimulating the competitative capabilities of original enterprises and making a change to efficient social and economic structures. In addition to this the respective policies of capital funding facilitating the establishment of new sustainable, productive enterprises and business and they also strengthen existing set ups by encouraging such investments. The fact is that Economic change is a procedure whereby the goods and services have been converted from knowledge. Because of these reason manipulating the links between knowledge generation and business development is the most important challenge facing developing countries. For these countries to promote the development of local technology some source as capital funding is highly necessary .Small and medium-sized enterprises may play leading roles in the development of new opportunities and the use of technology. Policy makers need to develop, apply and emphasize the important role of engineering, technology and small enterprise growth as source of development. It will be the first and foremost duty of the policy makers to impart all the assistance regarding business and production networks as well as sharpening the associated skills through business education. Here the role of the   Banks and financial institutions has to be timely mentioned. 13 But their record in this field has been poor in developing countries. They can give some exemptions like Specific credits and tax breaks to businesses that seek to upgrade their technologies. In most of the developing countries, the treatment of foreign capital is same. Once the foreign capital is admitted it will be treated as the indigenous capital. The facilities for remittance of profits will continue. The major interests in ownership and effective control of an undertaking whether it is a new business or it s a private sector should be in the borrowed countries. If an enterprise is acquired in any case, the compensation will be paid on fair and equitable basis. The government would not object to foreign capital having control of a concern for a limited period and each individual case will be dealt with on its merits. Altogether we can say the government treats the foreign capital fund on a non discriminatory manner. But critics always argued that setting up a business or starting a enterprise in the private sector with capital fund of the foreign developed countries has encouraged a wasteful use of scarce resources. For e.g. accepting a large proposals in industries which the governments regarded low priority like safety pins, cosmetics ,toothpaste ,toys, gramophones etc. effect the policy. Moreover foreign capital funding involves both inflow and outflow of foreign exchange. This type of investment will be highly desirable if the inflow of foreign 14 exchange exceeds the outflow. The inflow of capital takes place through the investment in cash and kind, the outflow takes place in the form of repatriation of capital, profits paid, abroad, and royalties and fees etc. Keeping all the above given information in my mind, I will pore over all these specified data and will carry out more studies in this field to give a frame work to the hypothetical work on effect of policies on development of new business and private practice in development countries. ************************* Chapter 6 Expected Results In developing countries setback of external capital flows and declining effect in the currency often strengthen domestic financial stability .Such stability usually turn into currency mayhems ,payment difficulties and external debt crisis. However, these currency and financial crisis in upcoming establishments occur under varying macroeconomic conditions. They occur when the current account deficit was large and unsustainable like Mexico and Thailand, and when such deficits were relatively small like Indonesia and Russia. Domestic macroeconomic policy plays an important role in such cases of financial cases and instability. The monetary and interest rate policies reinstate market confidence and close down currency rate keeping sufficient foreign exchange reserves and credits. Moreover when financial market affects the crisis the policy on capital flows tend to be perverse because of the strong influence on credit risk. Policies always urge that debtor countries should maintain adequate reserves to meet their short term obligations in order to avoid currency mayhems against massive foreign investment. So it can be inferred from the above discussions that the relevant policies are playing a remarkable role in capital fuding amidst of criticisms. In the light of above, I will analyze all these aspects whether it is of positive impact or it is of critical review of such policies and it will be helpful to me to reach a conclusion that real effect of policies of capital funding in developing countries in the context of new business and private practices. ******************** References Books and Authors 1. Amsden, A. and Singh, A., (1994) the optimal degree of competition and dynamic efficiency in Japan and Korea, European Economic Review, Vol. 38, Nos. 3/4 2. Caves, R.E. and M. Uekusa, (1976) Industrial Organization in Japan, the Brookings Institution, Washington, DC 3. Chang, H.J., (1994) The Political Economy of Industrial Policy. St.Martins Press, New York. 4. Dell, Sidney: Can Foreign Investment Revitalize the Third world, 5. Fox, E., (1999) Can we control Merger control? -- An experiment. Policy Directions for Global Merger Review in Global Competition Review. 6. Grimaldi, R. and Grandi, A. (2005) "Business Incubators and New Venture Creation: An Assessment of Incubation Models," Technovation, 25: 111-121. 7. Howes, C. and Singh, A., eds., Competitiveness Matters: Industry and Economic Performance in the US. Forthcoming September 1999, University of Michigan Press: Ann Arbor. 10. Noorbakhsh ,Farhad and Paloni ,Alberto Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence World Development, Volume 29, Issue 9, September 2001, Pages 1593-1610 11. Radelet, S., and Sachs, J., (1998) the East Asian Financial Crisis: Diagnosis, Remedies, 12. Schulpen, L. and Gibbon, P. 2002. "Private Sector Development: Policies, Practices and Problems," World Development, 30(1): 1-15. 13. Scherer, F., and Ross, D., (1990) Industrial Market Structure and Economic Performance, Houghton Mifflin, Boston. 14. Singh, A., (1993) Regulation of mergers: A new agenda. In Industrial Economic Regulation: A Framework and an Exploration, Sugden, Roger ed., Routledge, London. Journals and Publications 15. The United States Agency for International development 16. Bureau of Economic Analysis US 17. Commission for Africa, 2005, Our Common Interest: Report of the Commission for Africa, Commission for Africa, London 20. Correa, C., (1999) Competition Law and Development Policies, Paper presented at Zurich Seminar on Issues of International Competition Law 21. Dumont, B., and Holmes, P., (1999) The breadth of intellectual property rights and their interface with competition law and policy: divergent paths to the same goal. In International Conference: Innovation, Appropriation Strategies, and Economic Policy, Paris. 22. Economist, January 5-12, 1999. 23. Hughes, A., (1992) Competition Policy and the competitive process: Europe in the 1990s, In Metroeconomica, Vol. 43, No. 1-2, p.1-50 24. OECD, (1986), The OECD Guidelines for Multinational Entreprises. OECD, Paris International Study, IFC Technical Paper No. 2, World Bank, Washington, DC, ISBN 0-8213-3231-7. 25. International Monetary Fund (1998) World Economic Outlook, October 1998. 26.Singh, A., (1998) Savings, investment and the corporation in the East Asian miracle. Journal of Development Studies, Vol. 34, No. 6, pp. 112-137 27. Singh, A., (1999b) Asian capitalism and the financial crisis. In Global Instability and World Economic Governance, Grieve-Smith, J., and Michie, J., eds., Routledge, London 28.Stiglitz, J., (1999) Two principles for the next round, or how to bring developing countries in from the cold. Speech, Geneva, September 1999. 29. World Bank, (1998) Global Economic Prospects. World Bank, Washington, DC 30. World Trade Organization (1999) Report of the working group on the interaction between trade and competition policy to the general council. (WT/WGTCP/3) WTO, Geneva. Read More