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Direct Foreign Investment - Coursework Example

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Name Professor Course Date Direct Foreign Investment I. INTRODUCTION The study of foreign direct investment between China and Brazil is of great importance because it aids in the understanding of the dynamics involved in the country’s foreign investments…
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Download file to see previous pages The growth of FDI has always been associated with the growth of financial markets in terms of market capitalization. This paper will compare the FDI in China and Brazil in categories of five factors that influence foreign direct investments. II. LITERATURE AND PREVIOUS STUDIES/ARTICLES SURVEY Research studies indicate that China and Brazil are expected to be among the largest economies in the world by the year 2050. The two countries are considered to be among the biggest and fastest growing emerging markets that have a significant long term growth potential. The two countries occupy a large geographical coverage and research shows that the countries contain about 30 percent of the global population. China and Brazil also have a combined GDP of $16.3 trillion. China and Brazil have an expanding middle class that is expected to double in number within a period of three years. This massive growth in the middle class in the two countries is expected to increase the demand for goods and investments. The two factors of population growth and the growth of the middle income segment make the two countries attractive for foreign direct investment. III. SPECIAL REMARKS AND PERSPECTIVES 1. Attract new sources of demand China has the largest population in the world and population estimates indicate that the population is expected to grow in the coming years. The country’s current population is estimated to be 1.4 billion people as of 2011. This clearly means that china has the largest consumer market in the world. According to Shaukat and Wei (30), large populations imply that an economy has a high potential of consumption hence creating more opportunities for trade. Investors are more likely to invest in China because of its large consumer market. The country has been recording large inflows of investments. The large population also acts as a source of cheap labor for businesses especially manufacturing companies. A large number of businesses have managed to establish their businesses in China because of the low cost of labor. In the case of Brazil, the country has a rapid growing middle class economy that has attracted a lot of FDI in recent years. According to Danhua (127), Brazil has managed to attract demand for foreign direct investment because of its rapidly growing middle class economy. The latest economic statistics indicate that the country has a nominal GDP per capita of $12,916 by the end of 2011. The statistics also indicate that the country has been recording an average nominal GDP per capita growth of 5 percent. These statistics clearly indicate that the country has a large purchasing power. The statistics also show that the country has potential prospects of recording an increase in demand for goods and services. This factor has played a major role in attracting foreign into the country. The above analysis indicates that China and Brazil have different factors that determine and influence new sources of demand. Whereas China drives its new sources of demand through population growth, Brazil drives new sources of demand through the growth of the middle income segment. Statistics reinforce the difference between the two countries through statistical data that support the two factors. China has the largest population in the world while Brazil is considered to have the highest growth in GDP per capita in the world. Estimates indicate that th ...Download file to see next pagesRead More
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