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International Business in the Emerging Markets - Essay Example

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(1) FDI trends in Asia and Latin America since the 1970s. FDI “stands for Foreign Direct Investment, a component of a country's national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations…
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International Business in the Emerging Markets
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Download file to see previous pages The magnitude of this flow of capital is momentous, and although there are well-defined reasons for this trend it has caught many by surprise.” The increase in FDI investment has mostly been in East Asia and the Pacific, Latin America and the Caribbean, regions of Europe, and Central Asia. This means Africa and other parts of the world did not receive much in terms of FDI. The effect this has on the poorer nation is that it keeps their currency low and the amount of available jobs are low as well as the economy being flat. The effect on the countries that receive investments are a higher foreign exchange reserve, more jobs, and a higher GDP. (2) China’s energy policy and its impact on developing countries in Africa and Asia. China is now the greatest energy consuming country in the world, surpassing the US based on the IEA (International Energy Agency) findings. Although Chinese officials dispute that the country is responsible for 2.25 billion tons of energy consumption, the country did admit to stockpiling oil when there is a lull in purchasing. China is also the leading gas emitter so it makes sense that China would be the largest consumer of energy. Also China spends the most amount of money on green technology. China has such a desire to dominate the oil market that is has gone against sanctions in order to invest in Iran. This means that not only are the Chinese going against what the world is trying to accomplish but also are strengthening the Iranian mindset of misinformation. Due to the fact that Chinese officials focus on controlling demand of gas by emphasizing price impacts the developing countries like Africa and Asia because the prices in these two countries are much higher than what would be in China. Why? Well first of all purchasing from Iran would lower prices but also being a major buyer in the market can allow for more pressure on the market. In Africa there is little pressure on the market for energy and Asia outside of China's consumption has a much lower energy demand. By cornering the market with the U.S, China is essentially decreasing the likelihood that Asia and Africa will ever be able to afford the energy costs. Even if these countries can afford it, are the citizens willing to pay for this consistently, or will they tire of high energy prices? The effect on Africa and some parts of Asia will be a lack of the supply of energy and therefore power outages, inability to drive cars, and issues of this nature. As a NY Times article states: “Power blackouts — “load shedding,” in utility jargon — are hardly novel in sub-Saharan Africa, where many electricity grids remain chewing-gum-and-baling-wire affairs. Even so, this year is different. Perhaps 25 of the 44 sub-Saharan nations face crippling electricity shortages, a power crisis that some experts call unprecedented. The causes are manifold: strong economic growth in some places, economic collapse in others, war, poor planning, population booms, high oil prices and drought have combined to leave both industry and residents short of power when many need it most.” These outages can be crippling for small businesses such as farms, and production companies. Factories would have to build another day and the company loses because they are unable to meet their obligations. (3) The drivers of globalization amid the current financial crisis. Before we can talk about globalization we must ...Download file to see next pagesRead More
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