ABSTRACT The developing economies have been closed economies for decades following a protectionist attitude in a bid to save the domestic industries. However, this has resulted in these economies being deprived of growth and development. As they started opening they lured investors from developed countries offering numerous incentives…
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Hence, the impact of FDI can be ascertained through reports and academic articles. FDI alone does not mean success and it depends on various other factors. With a view to evaluate the impact that the MNCs make by entering developing economies, this study was conducted. This study is based purely on secondary data through reliable sources. After reviewing literature on the theories and perspectives on FDI and on emerging economies, two MNCs that have invested in two different economies – China and India - were studied. Yamaha of Japan invested in India as a market expansion strategy and achieved initial success. Their investment and control was limited and as competition increased, they could not sustain. They still have two plants in India but they are yet to achieve success. Cultural distance seems to be the dominant factor in the outcome. In the case of China, General Motors of the US adopted a unique strategy by entering through investments in research and development at the behest of the local government. Gradually they could enter into manufacturing and today they sell more trucks in China than they do in the US. GM adopted a vertical approach to FDI in China because of the huge difference in the factor endowments. Thus, the success or failure of the MNCs in developing economies requires taking into account the risk factors and knowing how to mitigate these risks. Prior experience is not enough. Table of Contents 1. Introduction 1.1 Background 1 1.2 Problem statement 2 1.3 Organization of the study 3 2. Literature Review 4 2.1 Definition and concept of FDI 4 2.2 Drivers of FDI 5 2.3 Emerging economies 7 2.4 FDI in emerging economies 9 3. Research Methodology 10 3.1 Research Philosophy 10 3.2 Research phenomenon 10 3.3 Research design 10 3.4 Research strategy 11 3.5 Justification for literature review 12 4. Findings and Discussion 14 4.1 India 14 4.2 China 17 5. Conclusion & recommendations 22 5.1 Conclusion 22 5.2 Recommendations 23 References 25 Appendices 27 1. Introduction 1.1 Background The developing economies comprising of low-income economies (with an annual gross national income per capita of $905 or less) and lower-middle income economies (income per capita between $906 and $3,595) jointly produce 41% of the world’s output, according to the World Bank Development Indicators 2008 report (Lenartowicz & Balasubramanian, 2009). Moreover, 5 of the 12 largest economies are now in the developing world. China and India’s economies are not expected to grow 22 times their current size by 2050 whereas the US is expected to grow only 2.5 times approximately. The developing countries constitute more than 80% of the world’s population. The geographical focus of growth has shifted towards the developing economies, which is the reason that the multinationals have been trying to develop economies in Asia, Africa and South America as profit sources. While the MNCs from the developed nations were seeking suitable circumstances for foreign market access, the developing nations also strived to draw the attention of the foreign investors by offering incentives (Michi, Cagatay & Koska, 2004). This led to a serious competition to access the developing nations’ markets and the evaluation was based on costs, internal market and ownership/location advantages. The developing nati
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“Investment in Emerging Market or the Effects of Foreign Direct Dissertation”, n.d. https://studentshare.org/family-consumer-science/1407459-investment-in-emerging-market-or-the-effects-of.
This paper purports to understand the relationship between the foreign direct investment and the growth and development of the underdeveloped and developing countries. The aim of the research project is to identify and explore the trends and patterns of Chinese foreign direct investment in Africa, with special focus on Nigeria and Ethiopia.
A Critical Analysis of the Government’s Strategies for Attracting Foreign Direct Investment in Saudi Arabia Abstract Saudi Arabia’s Foreign Direct Investment (FDI) performance has been characterised as significant, but does not live up to the Kingdom’s full potential (UNCTAD, 2004).
To discuss in detail the factors that increase FDI inflows in Greece. 2. The role of Economic and Monetary Union in attracting more FDIs in Greece. During the late 1980s, inward FDIs particularly aimed at the manufacturing industry in Greece where as, at present, Greece basically draws FDIs in the services sector that includes real estate, financial intermediation, etc.
...............................................4 Research Methodology……………………....................................................................................9 Data Analysis………………………………………………………………….
After the industrial revolution, a world which was primarily agricultural in nature started to industrialize at a fast pace. The energy required for such fast paced industrialization readily required the increased supply of energy. Wood was the prominent source of fuel which provided power to the factories in the initial stage of industrialization.
This is because of the fact that internal resources and capabilities have limitations in keeping the economic progress of a country beyond certain limits. Even developed countries are currently trying to increase FDI as much as possible. Globalization has given momentum to this trend.
Executive Summary This study aims to explore the impact of main challenges in the Chinese outward FDI particularly in the case of the Chinese Marble Companies in Portugal. To determine the common challenges being faced by most of the Chinese marble companies in Portugal, a primary research study which combines the use of quantitative and qualitative methods was conducted on 100 online research survey respondents.
Various reasons have been identified that contribute to the existing level of poverty in these countries. The SSA countries can be classified according to their level of participation in the international trade. Some countries in this region exhibit higher degree of openness while others have very low level of openness.
The rip-roaring regional growth showed in the 10-fold increase in per capita income in South Korea, five fold in both Thailand and China, four-fold in Malaysia. Estimates were that as much as $100 billion in foreign money flowed into Southeast Asia alone in the form of short-term loans and portfolio investments.
According to the report foreign direct investments therefore comes about when investors from the developed economies transfer physical as well as financial resources towards the developing economies for the purpose of wealth creation and this has been rampant in the past years. FDI has towards emerging economies.
8 Pages(2000 words)Dissertation
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