INTERNATIONAL PRODUCTION AND GOVERNANCE - Essay Example

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International Production and governance Introduction With the growing demand of the consumers for variety of products the scopes of foreign direct investment in different emerging sectors are also increasing at an alarming rate. One such sector that is gaining huge importance and growing at a good pace is the retail sector…
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INTERNATIONAL PRODUCTION AND GOVERNANCE
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Download file to see previous pages Food retailing is a subcategory of the retail industries. The business sector of food retailing is experiencing a dramatic change over these few years. The main driving forces of the retailing industry specifically the food industry are the consumers. They are creating the demand for the products that is increasing the scope for the expansion of this sector of the retail industry. The population growth of the developing countries and the increasing wealth in the hands of the consumers are influencing the rapid growth of these retail industries thus they are attracting more and more investments. (Retail, 2011) However these foreign investments in the food retailing sectors of other countries have certain influence on the economy of the country in which the investment is ultimately being made. The influence may to a certain extent impose a positive driven force for the country’s economy however it may have some adverse consequences. This is the scope of study of this paper. Impact of foreign direct investment on food retailing on receiver country’s economy The retail sectors of the modern economy had its base in the traditional retail supermarkets. Then with its emergence in the period of the last eight decades, it spreads slowly in the western region of the European continent and in the United States of America. During the period of their expansion in the Western Europe and United States there was hardly any foreign direct investment made in retails sectors of the economy. The spread of the retail sectors in the developing countries of the world were over five times faster than that in the developed countries in the past. The main reason behind this sudden significant transformation from traditional shops to retail was the huge amount of the foreign direct investment that the retail sector of these developing countries could attract. The expansion of retailing that had been achieved in the United States over the last eight decades had been achieved by the developing economy of Brazil within a period of just two decades only because of the huge rate of foreign investment that were made in the expanding sectors of the emerging economy. Moreover the sub sector of the food supply in the total retailing took more time of adjustments in the retail transformation in the developed economies. However this was an advantage for the sector as food retailing became much better equipped with capital and the support they received from the public sectors of the economies. The scenario of food sector in the developing economies of the world was a bit different. Small firms constitute majority of the food suppliers in the developing countries, which have a relatively low capital base, and lack of support from the public sectors of the countries. The growth of this sub sector of retailing in the developing economies of the world had been mainly due to the increased Foreign Direct Investments in these sectors. The Foreign Direct Investments possess the potential of improving the performance of the food retailing in the developing economies. The international expansion of the food retail sector had been substantially due to the investments made in the new emerging markets from the period of the nineties. (Reardon & Hopkins, 2006, p 522-524: McKinsey & Company, n.d, p. 7) The overall impact of the Foreign Direct investment in the food retail sector of the countries especially the developing ones are considered to be positive. ...Download file to see next pagesRead More
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