Foreign Direct Investment As A Key Component Of Economic Globalization

The economy of Nepal is liberal, more privatized, and open as compared to other economies in South Asia. Nepalese economy is suffered from investment saving gap and trade gap which results into the need of FDI. Some of the limited natural resources available in Nepal are waiting for huge investment. But lack of sufficient domestic capital hampered the use of these resources. Therefore, FDI and its implication in Nepalese economy have great importance. Furthermore, cement industry is an industrial base of Nepal which occupies more than half of industrial gross domestic product. The following chapters deal with the background of the study of FDI opportunities in cement industry in Nepal.

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business.

First of all, the investment flow into the host country does not produce an immediate effect but accrues benefits over a period of time and the level of the positive effect may vary from country to country. The conditions that FDI faces in the developing countries may slow down the process. The issue is that in order to make use of all benefits, which were discussed earlier, the host country has to have a certain level of education, technology, sufficient openness to trade and appropriate policy regulations. The restrictive policy or insufficient precondition state of economy of the host country will not bring the expected advantages. Moreover, the developing states having a low development level may experience certain disadvantage of the foreign direct

Foreign direct investment (FDI) has played a huge part of the international economy influencing economic growth globally with a total of $1.2 trillion spending via it in 2014 (UNCTAD, 2015). Over the past five years from 2011 to 2016 the UK has seen its FDI increase by almost double to 2213 individual FDI projects, this being an increase of 11% from 2014/15 to 2015/16 (Department for International Trade, 2016). The UK also stands out as the clear leader in attracting this FDI into the UK taking a total of 20.9% of the market share of FDI in the European union (Ernst & Young LLP, 2016). FDI is becoming an influential power within the economic system for the UK. A current FDI project underway seeing the constructing of a new nuclear power

Brazil can be seen as country that is open and inviting foreign investments. Brazil remains the top destination for FDI in the Latin American region and according the A.T. Kearney Foreign Direct Investment Confidence Index for 2015, Brazil is ranked #6 as a global FDI destination. FDI inflows into Brazil stood at USD 60.5 billion as on Feb 2015, (Central bank of Brazil). The US Department of State’s report on Brazil states that Brazil is a foreign investment friendly country however complex tax, local content and regulatory requirements must be looked out for. The Brazilian economy’s GDP growth has been erratic, but is showing signs of stability and is expected to hit 2.1 % during the year

The economy in China has always been inspiring to me, how this country made all of this civilization and how this country used its economy to overcome the barriers which it faced by used lots of methods. One of these method is the ‘’Exchange Rate Issue’’ in general is the low value of your currency to increase the investments and therefore, will increase the rate of employment. So, an important determinant of foreign trade and foreign investment is the exchange rate. A low value of Chinese RMB makes Chinese exports cheaper and investment in China more attractive if the investment is to produce for export. Many countries in the world including those in the European Union, Japan and Taiwan, have adopted the flexible exchange rate system while China adopted a fixed exchange rate up to July 2005 but the government did change the fixed rate several times in the 1980s and early 1990s relative to the US dollar as its government deemed appropriate. Most recently the Chinese government has adopted a managed floating rate with the government deciding the rate around a small band daily relative to the value of a basket of foreign currencies but the basket is not explicitly specified. There are pros and cons of the fixed and the floating exchange rate systems. (See the Appendix for a more detailed discussion.) A fixed exchange provides an anchor for the government in the conduct of its monetary and fiscal policy. It limits the discretionary power of the government in the exercise of its

Foreign direct investment has long been a subject of sensitivity around the world (Moran 2012). As the largest investor and the largest recipient of foreign direct investment, the Unites States has important economic, political, and social interests in the development of international regulations regarding direct investment (Jackson, 2013). As a sovereign state, the United States has sought to curb its embraces of open markets and free capital flows with protection of national security interests. In this section, I will first introduce the Organisation for Economic Cooperation and Development’s (OECD) basic statement of foreign investment, and then turn to the discussion of U.S. policies on foreign direct investment. This section ends with

This was very successful for India “It said after the launch of 'Make in India ' initiative, there is a nearly 40 per cent increase in FDI inflows during October 2014 to June 2015.”(Economic Times). FDI from developed countries to developing countries is a vehicle not only for providing physical capital, but also for transferring advanced technology, managerial skills, and innovative products. The transfer of intangible assets if often viewed as the “spillover” effects of FDI. Foreign affiliates from developed countries may also replace inefficient firms in developing countries. In “The Grand Seduction” once a fishing community where people lived happily were now dependent on government welfare. The government was helping its citizens but the help in a way was degrading lives of the people. People wanted to leave the town and go elsewhere. In the movie we see the mayor planning to offer full tax exemption to bring in the factory in the town. The movie shows the FDI as a last resort to revive Newfoundland. Studies show that FDI in the manufacturing sector plays a very important role in enhancing the economic growth, but FDI in nonmanufacturing sectors does not, example agriculture. Manufacturing FDI accounts for the lion’s share of FDI inflows in developing countries. In Foreign Direct Investment “Based on two-stage least squares, manufacturing FDI share has positive and

There is no doubt that foreign direct investment (FDI) can do a lot of good for a country, for instance it can add to an economy’s productive capacity and import not just capital but technology, production skills and better management. Multinational Corporation (MNC) is a large corporation which produces or sells goods or services in various countries. MNCs often seek out developing countries in order to set up a branch of their corporation in that host country and they do this to seek out several benefits. One benefit is that the MNC can bring their product to a new market that may not have previously had it. Another reason to produce goods in a country that is not its home country is primarily because; in developing countries the MNC can

After opening of the trade barriers in 1991, the foreign investment inflows have increased enormously. Foreign capital, which actually plays an important role in increasing productivity of labor and accumulation of foreign reserve in developing countries to meet the current account deficit , is consist of foreign direct investment (FDI) and foreign portfolio investment(FPI). Both have worked as an instrument of global economic integration and stimulation. Apart of providing access to the foreign capital FDI also offers modern era technology, tools of creativity, desired skill sets and other complementary skills. In addition of producing additional economic activity and generating employment, foreign investment facilitates in flow of sophisticated technology.

Throughout a range of researches show the widespread perceptions on “open” economies that they encourage more foreign investment. According to Charkrabarti (2001), the ratio of exports and imports to GDP is mostly used to see the significance of openness to FDI. Jordaan (2004) states that the more a country is open to international trade, the more likely to be a factor in the FDI destination decision. The paper further claims that multinational enterprises engaged in export-oriented investments tend to prefer to invest in a more open economy due to high level of transaction costs associated with exporting. High trade protection caused by increased market imperfection affect and implies higher transaction costs.

Developing countries lag behind the rest of the world in many aspects of life including economy, education, and welfare. Achieving progress in any of these three areas is important in getting these countries on par or at least closer to the standard of living present in developed nations. Numerous of hypotheses have been posed to tackle and address these issues. This paper examines the aspect of improving the economy and whether or not foreign direct investment by multinational corporations would benefit developing countries. Some may argue, including the renowned artist Frida Kahlo that foreign direct investments may actually lead to a decline in culture and exploitation. However, this paper argues that the economy in developing countries could be significantly improved by properly introducing foreign direct investment by multinational corporations. Foreign direct investment (FDI) made by multinational corporations would spur the economy in developing countries which in turn would lay the groundwork for improvements in other important aspects including education and welfare without a decline in culture and exploitation of citizens.

Foreign direct investment plays a critical role in financing the development of emerging economies. Foreign direct investment benefits countries through a transfer of resources in the form of capital, technology, management of resources, creation of work opportunities, and a positive impact on the country’s balance sheet, typically through an increase in export volumes. These benefits are essential for sustainable growth and development of a country, especially for developing countries. Despite the important role that foreign direct investment plays in helping to achieve the Sustainable Development Goals, many developing countries face challenges in accessing this source.

Foreign direct investment (FDI) in context of Pakistan is one of the major contributors that help Pakistan to minimize the gap of financial resources and funds. FDI has played a significant and vital role in the domestic markets of

The visit of Narendra Modi, Indian Prime Minister to Nepal undoubtedly strengthened the ties between the two nations. But, most importantly, it also provides Nepal with an avenue for development through investment – foreign direct investment.