Notes On The And Flow Data

(firms) have overall – some have invested in foreign countries through FDI - felt that

We analyze domestic entry, foreign entry through imports and foreign entry through foreign direct investment (FDI).

Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased. The Organisation of Economic Cooperation and Development (OECD) defines control as owning 10% or more of the business. Businesses that make foreign direct investments are often called multinational corporations (MNCs) or multinational enterprises (MNEs). A MNE may make a direct investment by creating a new foreign enterprise, which is called a greenfield investment, or by the acquisition of a foreign firm, either called an acquisition or brownfield investment.

FDI stands for Foreign Direct Investment ; it is an investment from one country into another (normally by companies rather than governments) that involves establishing operations or acquiring tangible assets, including stakes in other businesses ( Financial Times ) .

In the face of the global economic slowdown (and recession in a number of major economies), tighter credit conditions and falling corporate profits, many companies have announced plans to curtail production, lay off workers and cut capital expenditure, all of which has implications for FDI .However, the impact of the crisis varies widely, depending on region and country, with consequences for the geographic pattern of FDI flows .

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 exhibit illustrates the dramatic growth of FDI into various world regions since the 1980s. The exhibit reveals that the dollar volume of FDI has grown immensely since the

Statistics shows that there was a sharp rise in FDI commitments in the period of 1998-1995. The number of investment projects go up at average 50 percent each year untill the end of

International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity of foreign direct investment (FDI), which is the amount of money that individuals invest into foreign companies and other assets. In theory, economies can, therefore, grow more efficiently and can more easily become competitive economic participants. For the receiving government, FDI is a means by which foreign currency and expertise can enter the country. These raise employment levels, and, theoretically, lead to a growth in the gross domestic product. For the investor, FDI offers company expansion and growth, which means higher revenues.

“The last fifteen years have seen an enormous growth of activity by multinational corporations, as measured by flows of foreign direct investment (FDI). FDI has grown much faster than either trade or income; whereas worldwide nominal GDP increased at a rate of 7.2 per cent per year between 1985 and 1997 and worldwide imports at 9.2 per cent, worldwide nominal inflows of FDI increased at 17.6 per cent.” (Shatz & Venables, 2000, p. 125)

One of the most significant factors of FDI inflows is trade openness. The term ‘trade openness’ refers to the degree, of which an economy allows to conduct trade transitions with other economies (Skouloudakis et al., 2013;12). The degree of a country’s openness can influence FDI in various ways.

Kolstad and Villanger (2008) showed that the relationship between FDI and GDP is always positive. When the GDP increases, it means the economy of a country is growing, when the condition of the country is stable, it will attract more foreign investors to invest in the country and thus result in the increasing of FDI. The positive relationship also supported by Oyatoye,Arogundade, Adebisi and Oluwakayode (2011).

One of the studies is done by the Dar et al (2003). This study summaries the long term relationship between FDI and Economic Growth. It gives

Yousaf (2008) Analyses of more than 3 decades reveal that FDI has positive relation with imports in short & long-run where as relationship with exports is negative in short & positive in the long-run. FDI is an economic influencer of economy of a country specially developing countries experience accelerated GDP when successful in attracting FDI as in case of Pakistan.

The third segment is devoted to the discussion of factors affecting FDI. The methodology of the study is described in fourth section. The fifth section provides the details of the results and final section presents the main conclusions and recommendations.