Impacts of Foreign Direct Investment and Funding on Exports in Developed and Developing Countries - Research Paper Example

The paper "Impacts of Foreign Direct Investment and Funding on Exports in Developed and Developing Countries" is an excellent example of a research paper on macro and microeconomics. Economic growth in all countries globally has been linked to a number of factors; one of these factors is exports. Exports in both developed and developing countries are affected by various factors including Foreign Direct Investment (FDI), domestic credit to enterprises, and Official Development Aid (ODA). This dissertation investigates the impact of these factors on exports in developed and developing countries with particular emphasis on FDI. The study analyzed FDI, domestic credit, and ODA data for 40 countries over a period of 43 years from 1970 to 2012 using regression and correlation methods. The countries were segregated into developed and developing country categories on the basis of their HDIs. The major finding of the study was that although the other factors also affect exports to different extents, FDI significantly affected exports in developed countries while showing no significant effect on the exports of developing countries. This finding validates the various calls for developing countries to institute policies that will enhance FDI and another economically beneficial aspect so as to grow their economy. The study concludes by highlighting that the benefits that accrue to developed countries from high levels of FDI can also be enjoyed by developing countries if the right strategies are put into place to improve it.
One of the most discussed topics currently in international economics is Foreign Direct Investment (FDI). Developing countries like China dread the misuse of foreign capital on the one hand and insufficient access to expertise, international marketing skills, and administration skills on the other. FDI comprises financial capital and impalpable assets like technology, professional capabilities, promotion skills, and other similar factors (Blonigen, 2005). It is worth noting that in most cases direct investment begins with very little or no net flow of financial capital. Occasionally, the parent company only adds its trademark name, managerial principles pegged with other assets of the less tangible variety (Moosa, 2002). A good prevarication strategy for a parent company that has possesses foreign currency is to take on foreign currency obligations as well (Ruane and Ugur, 2005).