Economic Commission For Afric A Perspective Of Foreign Direct Investment ( Fdi ) Inflows And Intra Trade Relations

China has played a significant role in the narrative of globalization in recent years, but additional effects are felt in neighboring countries. The auto industry has taken advantage of outsourcing to China to reduce costs. Therefore, “China started outsourcing to other smaller nations in the South East Asia,” (Vivek & Ghate, 2016, p. 330) which allowed these nations to feel the benefits of globalization as well. Due to the effects of globalization, “evidence shows us that both advanced and developing economies have seen increases in their trade-to-GDP ratios of approximately fifty percent from 1970 to 2009.” (Mazumder, 2017, p. 58). Globalization, in these examples, has benefited many nations, organizations and people around the world.

This phenomenal change in the international environment in which business is conducted has resulted in increased levels of foreign direct investment by companies from developed countries in lesser developed economies such as the Third World as economic benefits were sought through the globalization of production as well as markets. (Hill 2011, p.5)

For many years, China has been known as the option for manufacturing abroad. There has been little thought about even considering any other country for manufacturing. However, times have changed. The entire economic battleground has shifted over the past few decades. As the years continue to go by, China begins to look less and less appealing. From rising costs to new competing markets, it looks like China’s near complete dominance in the marketplace is coming to an end. The question now becomes, why should companies leave China? If these companies do indeed choose to leave, the next questions will become, where will these companies go?

5. The modern international trade theories explain trade from a firm, rather than a country, perspective.

In the past five years, however, China’s outbound direct investment has entered a “new era” as Chinese investment interest has shifted from targeting resource-rich developing countries to advanced economies (Hanemann & Huotari, 2015). Though energy is still a targeted industry, “Chinese firms are eager to acquire advanced manufacturing assets that allow them to modernize technology and move up the value chain” (Hanemann & Lysenko, 2013, p.1). This has led to increased Chinese investment in developed economies, including the United States and Europe, in sectors like high tech, modern service assets and infrastructure (Hanemann & Lysenko, 2013). Chinese direct investment in the United States

A significant proportion of international trade comprises of trade between affiliates of multinational enterprises (MNE). For instance in the United States of America (USA) intra-firm cross border trade between 2005 and 2014 ranged between 39.8% to 42.3% of the total value of cross border trade in goods with a low of 39.8% being recorded in 2008 and a high of 42.3% being recorded in 2014. The value of intra-firm trade for USA import from Africa constituted 31.9% of the total value of imports from Africa by the USA in 2014 while intra-firm export by the USA to Africa accounted for 15.6% of the total exports from the USA to Africa in 2014 . Data on intra-firm trade from African countries to other regions of the world is rare. It can be inferred that the proportion of

Foreign direct investment (FDI) is created when a company buys assets in foreign country and invest in foreign countries property, plant or equipment, and also the participation a joint venture with a foreign local company. In addition, when a company begins FDI, the company will become a multinational company. Foreign direct investment has been spreader significantly in the previous two decades through the world economy. More and more countries and sectors has constitute to become one of the international foreign direct investment network. An important force creating better global economic combination are represented by different types of FDI. (Mody, 2004). In the following discussion, there will be reasons why China remained

Firstly, economic integration requires willingness to share their sovereignty at the political level in order to ensure that community goals preceed over national interests. It is not clear whether the members of any of Africa’s RECs are prepared to do this in a meaningful way(Alves et al, 14). Sovereignty and nationality concerns drive African member states to become reluctant actors in their approach to integration because it can undermine the sovereignty of their states. As a result, the strong prevalence of national sovereignty and efforts to guard it, has led to the creation of an inconsistent organizational structure that lacks supranational scope (Ningaloo, 18). Regional integration have been influenced by two

In today’s world of investment, every country, every region, competes for foreign direct investment; however, they do so disproportionately - one thing is for sure: The more FDI, the better. FDI flows generally follow investor’s choices, interests, and perceptions. The need to earn more creates new opportunities for investors and nations alike. But

Over the recent years, FDI has responded to new information technology systems, the reduction in global communication costs and the liberalisation of the national regulatory framework which controls investment in enterprises, (easing of restrictions and on foreign investments and acquisition in many nations) have simplified the management of foreign investments as compared to the past ( Spaulding and Graham, 2004). These are some of the factors which fuelled FDI’s expanded role in today’s global business. According to the UNCTAD (2004) foreign direct investment flow in developing countries has exploded through mergers and acquisition and internationalisation of production in a range of industries. FDI in developed countries rose from $481 billion in 1998 to $636 billion in 2004 (UNCTAD, 2004).

There is a general consensus that federal direct investments are thought to bring a considerate amount of economic well-being for developing countries. It is intriguing to observe the true effects of Federal direct investments on developing countries. While FDI has become an outcome of a more globalized world, some countries do not see the same benefits of this phenomenon as other countries. One country that has seen a heavy influx of foreign direct investment is India. This paper briefly addresses both the positive effects of FDI on India and looks at the growth of GDP in India’s economy. It concludes that FDI has transformed India’s economy and will continue to transform it. From this research, it will give a deeper

The factors involved in process of economic growth of nations have transformed overtime, from savings to trade, foreign investment and human capital base of the country. With opening up of the economies and the formation of multiple agreements among the countries, trade and FDI have become the major medium of accord among the economies. There has been surge in FDI inflows ever since the countries adopted liberalisation policies across the globe. The countries have been looking for policies to attract more FDI by boosting investment climate in their countries, to finance their process of growth and development.

In the recent time, significant rise of outward foreign direct investment (FDI) was witnessed from developing countries like China and India. The Organisation for Economic Co-operation and Development (OECD) defines FDI as an investment that reflects the objective of establishing a lasting interest or long-term relationship by a resident enterprise in one economy (direct investor) in an enterprise (direct investment enterprise) that is resident in an economy other than that of the

In this case FDI enables countries to manage their problems arising out of escalating external debt by providing an alternative source of long-term financing. Secondly FDI has the potential of meeting the domestic resource gaps of developing countries, thereby, enhancing their growth prospects. It is based on the argument that the long-term view of benefits arising out of FDI is based on the perception that such inflows of capital acts as 'engines of growth' in developing countries. Due to increased inflow of the foreign investment the level of capital formation raises that significantly contributes to the countries' growth processes (Dhar & Roy, 1996).

Foreign Direct Investment as seen as a main source of non-debt inflows and is increasing being required as a vehicle for technology flows and as a means of attaining competitive efficiency by creating a meaningful network of global interconnections. FDI plays a critical role in the economy since it does not only give opportunities to host countries to enhance their economic development but also opens new vistas to home countries to optimize their earnings by employing their ideal resources.