In Recent Time, Outward Fdi Has Been Significantly Increased from China and India. Discuss the Factors Responsible for Such a Growth. Do You Think Ib Theories (Oli and Idp) Adequately Explain the Reasons for Outward Fdi

According to Moosa (2002), “Hymer (1976) organized the industrial organization hypothesis. Kindleberger (1969), Caves (1982) and Dunning (1988) further explained the hypothesis. This theory assumes that the firms when it establishes an enterprizes in another country it suffers from many disadvantages in comparison to local investors. The cultural aspects, languages, legal system and other factors play an important role in determining FDI. But there is increase in FDI. The theory explains about why firms invest in foreign countries. But the theory fails to explain the motivation for choosing the locations. This theory explains the expansion of FDI is due to capital, management, technology, marketing, and access to raw materials, economies of

Figure 1.7 The structure of the dissertation Figure2.2 Modes of entering foreign markets Table 2.32 Factors affecting the FDI decision Figure 2.33 Types of FDI 12 15 19 22

FDI allows the home country to invest into the host country to produce, advertise, and distribute products, in order to upsurge their market share and provides a long-term investment and enhancement. (Moosa, 2002)

After IMF and World Banks involvement India took steps towards liberalization and privatization to reform India’s economy. Lowered tariff levels, reformed exchange rate policy, liberalized industrial licensing policy and also relaxed India’s foreign direct investment (FDI) policy. These reforms opened the doors for multinational corporations to invest in India. India received positive responses from international investors. Before the 1991 reforms, foreign equity ownership was restricted to 40 percent and the transfer of technology was necessary to do business in India. These barriers were removed for foreign companies. Many multinational corporations (MNCs) took advantage of India’s new economic policies and increased their stakes to more than 51 percent in their subsidiaries resulting in a several fold increase in foreign direct investment in just three years (Gosai, 2013).

Foreign direct investment (FDI) can be defined as a process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distributions and other activities of a firm in another country (the host country). FDI also have another definition like ‘an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investor’s purpose being to have an effective voice in the management of the enterprise’- International Monetary Fund’s Balance of Payment Manual and ‘ an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign

FDI can be defined as a process whereby an investor places money into a business overseas, therefore implying that the investor now has a certain level of control over the foreign business that was purchased (OECD 2008). Due to the vast size of MNCs, it is common for an investor to purchase a section of an overseas MNC as they may wish to expand their own company and branch out (OECD 2008). However, it is also common for the MNC itself to participate in FDI by investing in an overseas company, as again they may wish to expand the size of their corporation and increase their scope and tenancy (OECD 2008). It is therefore

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

the theories of FDI; section two will discuss the cases of both firms‘ strategic changes;

According to the International Monetary Fund (IMF), Foreign Direct Investment (FDI) is defined as “cross border investment where a resident in one economy has control or a significant degree of influence on the management of an enterprise in another country.” FDI in the past decade has grown intensively, exceeding the growth of world production and the growth of international trade (Dierk, 2008). Many nations are open and engage in FDI because it will benefit domestic firms. Brazil, a top emerging market, has experienced record number of FDI projects, establishing it as the second most popular global destination in terms of FDI value. The country has experienced steady growth over the past decade and is projected to keep increasing its number of FDIs.

In 2009, China attracted $95 billion FDI inflows, accounting for 1.9 percent of its GDP compared with India’s $36.6 billion inflows, equivalent to 2.7 percent of its gross domestic product. China attracted 2.5 % more FDI’s than India in the year 2009.India’s FDI inflow dropped by 14 percent in 2009 and that of China by 12 percent. India should improve its infrastructure as well credibility of the government to attract FDI’s. India is a vast country with many natural resources including metals, minerals and oil deposits. English speaking ability gives edge over China to improve its service sector. India should sustainably increase it’s invest on infrastructure to attract more FDI’s. Foreign investors, who could invest their money anywhere, find more opportunities and less obstacles in China. (Zhou Siyu, 2010)

Economic growth and benefits of foreign direct investment depend on factors such as the industry and the learning curve. Foreign direct investment (FDI) is, “a controlling ownership in a business enterprise in one country by an entity based in another country.” [1] There are three strategic types of FDI: Horizontal FDI, Platform FDI, and Vertical FDI. The horizontal FDI is, “when a firms duplicates its home country-based activates at the same value chain in a host country through FDI. Platform FDI occurs when “foreign direct investment from a source country into a destination country for the purpose of exporting to a third country. Vertical FDI “takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.”[1] It is a common belief that FDI increases local growth (economic development); and the benefits come from transfer for technology and management know-how, introduction of new processes, and employee training. [2]

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

Outside prompt endeavor (FDI) is consistently contributing in the valuable improvement toward the economy of one country in light of the hypothesis by another country or country 's personnel 's. The reasonability and adequacy of Global economy depends on the theorist 's perception, if wander seen with the inspiration driving long terms enthusiasm for the social-judicious change then it is said that the hypothesis contributes completely towards overall economy, in case it is transient with the deciding objective of making advantage then it may be less tremendous than that whole deal and disinvestment leads negative effect. The FDI may moreover be impacted due to the regulatory trade preventions and methodologies for the remote ventures and prompts less or more fruitful toward responsibility in economy furthermore GDP and GNP of the country.

FDI is where the MNE invests directly in production or other facilities over which it has effective control in a host economy (j &t). According to Pollan (), the definition of the terms “investment” is highly significant to Foreign Direct Investment, which can be typical comprehend as the conveyance of capital to a country. Investment can be defined as money committed or property acquired in order to gain profitable returns, as interest, future income or appreciation in value (business dictionary, 2014). The commonest definition used to understand the idea of FDI is the definition provided by International Monetary Fund’s (IMF). The IMF definition of FDI introduces systems and structures which clearly demarcates foreign direct investment from portfolio investment. According to the IMF, direct investment creates a lasting interest in an enterprise, consisting of a long-term relationship between the investor and the enterprise and that the investor has an outstanding amount of control on the management of the enterprise, while portfolio investment does not create an extended relationship and the portfolio investor is rarely directly partaking in the day-to-day management of the enterprise (Pollan,). FDI however has no comprehensive, authoritative and ubiquitous legal definition and the test for the existence of enough degree of control differs in scope depending on applicable law in a

Foreign Direct Investment (FDI) refers to the investment made by an investor from a country to buy controlling shares of a business in another country. When an investor buys stocks and bonds in a country, it is referred to as portfolio investment. Unlike other passive investments, FDI is a direct form of investment in which the investor has to have the control of the ownership. FDI is seen