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Macro and Microeconimics, FDI - Essay Example

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Macro & Micro economics Table of Contents Introduction 3 Flow of global FDI in the developing and developed nations 4 Underlying reasons behind rising FDIs in developing nations and falling FDIs in developed nations 8 Justification for the developing countries to dismantle FDI barriers in the present global economic climate 11 Reference 14 Bibliography 15 Introduction Policy makers and academicians have emphasized on the various forms of capitals flows and FDIs account for the most predominant of them all…
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Download file to see previous pages During the same time the world economy was confronted with severe economic crises, especially in the South East Asian countries and Latin America. Thus’ emerged the various criticisms regarding FDIs in developing and emerging nations. However, there have been concrete evidences about the positive effects of FDIs in countries like Kenya, Tanzania and Uganda. New data from these countries suggest that FDIs have been successful in bringing about benefits to both the host economies as well as the workers in the foreign owned organizations. Africa, has been failing to exploit the advantage of foreign capital in way of not attracting FDIs Also one cannot ignore the fact that FDIs have been increasing worldwide and especially in the developing nations and that these countries have demonstrated greater growth in GDP since then. However, on the contrary the growth rate of developed nations have been comparatively lower than the developing nations abiding by the economic theory that capita accumulation is essential for the development of nations. The various reasons behind the contribution of FDIs in moving the developing economies towards growth would be discussed in this project. This is done by the provision of supporting evidence for the sane. Also in the present economic climate the pros and cons of implementing FDI barriers have also been analyzed in the project. Flow of global FDI in the developing and developed nations The recent economic crisis drew a lot of FDIs in the developing and emerging economies across the world. However, the impacts of FDIs have been different for different countries and regions and sectors. The economic crisis majorly affected the developed nations in the world and the FDI flows into the regions have also suffered a setback due to the sluggish market prospects. However, FDI flows into the developing nations continued to grow since 2008. But the rate had come down since the previous years as well. Researchers have put for the argument for this decline as an outcome of drawback of both the resource seeking and efficiency FDI aimed at being exported to the developed nations which were then going through a depression and the market seeking FDIs which aimed at serving the local markets have receded (UNCTAD, 2009, p.2). Since 1980 and 2000, the world has witnessed tremendous increase in FDI flows in various sectors and regions. According to recent statistics provided by the UNCTAD, the inward stock of FDI in the world was $0.8 trillion in 1990 while the figures were $1.95 trillion and $6.15 trillion in the years 1990 and 2000 respectively. Traditionally FDI was considered to be a phenomenon which was primarily associated with the highly developed economies of the world. Developed nations have always attracted highest shares of the foreign FDIs as compared to the developing nations. However, recently this tradition has undergone change. In recent years FDI flows in the developing nations have been greater than the economically advanced nations. The average annual inflow of FDI in the developing countries was eight times more than the years between 1982 and 1987, and the years between 1994 and 1999. Consequently the developing countries attracted almost one-third of the entire flow of FDI in the worl ...Download file to see next pagesRead More
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