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The Effect of Foreign Direct Investment in the Banking Sector on the Libyan Banking Industry - Research Proposal Example

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Objectives of the study are to determine the effect of foreign direct investment in the baking sector in Libya, to identify the entry methods used by foreign investors in the Libyan banking industry, and to establish potential pitfalls faced by foreign investors venturing into the Libyan market. …
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The Effect of Foreign Direct Investment in the Banking Sector on the Libyan Banking Industry
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Download file to see previous pages An investment in a foreign market can also be referred to as an FDI if the foreign company acquires a significant stake in an already existing firm. The acquired stake must enable the foreign firm to have a controlling interest in the company. This means that the foreign investor can “alter the way of doing business” for the new company including change of name, nature of doing business or the products on offer (Froot26-27). According to Barclay, firms mostly multinationals engage in Foreign Direct Investment with the aim of “increasing profitability and also increasing its global presence” (101). It is also aimed at minimizing the risk that is inherent in international business operations. A firm that engages in FDI stands a better chance of surviving in turbulent economic times if it operates in more than one market. A firm may also engage in FDI to “check the expansion of a local competitor into a new market” (Barclay 77). The aim is to prevent the local competitor from gaining a foothold in a foreign market and then using its newly acquired status and resources to destabilize the local market.
Martinez says that Libya is a country in the African continent with a “fairly complicated history” (81). It has evolved from decades of misrule, revolutions among other national evils. It has for a long time been accused of sponsoring terrorist activities and was listed among the axis of evil by the American government. Libya was put under the microscope by the United Nations after it was accused of sheltering the suspects accused of the Lockerbie bombing. Consequently, it was put under UN sanctions and this severely affected its economy. Today Libya is one of the “emerging economic giants in Africa courtesy of its abundant oil resources” (Ham 35). It has also normalized its relations with the west and the UN lifted its economic sanctions after the Arab state complied with the set demands. Libya has a population of around 6 million people and a GDP of $21 billion.   ...Download file to see next pagesRead More
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