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单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,Chapter 2 International Investment,In this chapter,well cover:,Defining International Investment,Foreign Direct Investment:Pros and Cons,Government Policies towards FDI,Evolution of Global FDI,Multinational Corporations,Defining International Investment,Four categories of international investment:,Commercial loans,Official flows,Foreign direct investment FDI),Foreign portfolio investment(FPI),Defining International Investment,FDI:international investment in which the investor obtains a lasting interest in an enterprise in another country.,Inward FDI:investments coming into the country,Outward FDI:investments made by companies from that country into foreign companies in other countries,Defining International Investment,FPI:investment in a companys stocks,bonds,assets,or money market instruments that are based in a different country.,Distinction between FDI and FPI:,FPI can be much more volatile,Foreign Direct Investment:Pros and Cons,Pros:,Provide foreign capital and funds,Benefits the host countries,1.Create jobs in regional labor market,2.Introduce advanced technology and technical know-how,3.Gain a greater foothold in the world economy and integrate into a wider market,4.Employees get exposed to globally valued skills,Foreign Direct Investment:Pros and Cons,FDI is beneficial to the investors and their home country:,Access to a larger market,Ability to tap the potential of cheap and skilled labor,Availability of natural resources of the host country,Foreign Direct Investment:Pros and Cons,Benefits the recipient country reaps from FDI:,Inflow of foreign capital into its country,The sharing of technical and managerial expertise,Foreign Direct Investment:Pros and Cons,Cons:,The risk of FDI destroying local capabilities and extracting natural resources without adequately compensating poor countries.,FDI is also detrimental to the host economy due to their large size and economic power,Foreign Direct Investment:Pros and Cons,The long-run balance of payment position of the host economy is jeopardized when the investor manages to recover its initial outlay,A loss of employment in the home country,The earnings or gains made abroad cannot be deployed elsewhere in the event of more profitable opportunities,Government Policies towards FDI,Many governments encourage FDI in their countries as a way to create jobs,expand local technical knowledge,and increase their overall economic standards.,Government Policies towards FDI,In contrast,many countries have restricted or controlled inward FDI for decades by requiring extensive paperwork and bureaucratic approvals as well as local partners for any new foreign business.,Government Policies towards FDI,Restrictive Policies:to limit or control FDI to protect local industries and key resources preserve the national and local culture,protect segments of their domestic population,maintain political and economic independence,and manage or control economic growth,Ownership restrictions,Tax rates and sanctions,Favorable Policies,Government Policies towards FDI,Financial Incentives,Infrastructure,Administrative processes and regulatory environment,Investment in education,Political,economic and legal stability,Evolution of Global FDI,The level of FDI and relative importance of the FDI:,Both measures were high in the early part of the 20th century,low in the middle part and growing and high towards the end.,Evolution of Global FDI,World War I and the great depression,After World War II,The end of the Cold War,From 1980 to 25 years later,During the 1990s,The early years of the 21,st,century,Multinational Corporations(MNCs),MNC:a business concern with operations in more than one country.,Merger,Operated as subsidiaries,Have considerable autonomy,Multinational Corporations(MNCs),Strategies and Procedures of MNC operations,Population and size of the market of a country,Economies with plenty of cheap labor,Status of water supply,telecommunications and transportation,Host countries make their policies open and investor friendly,.,Multinational Corporations(MNCs),Other factors:,Businesss needs and overall strategy,Merger with or direct acquisition of existing companies in a new market,Sequential market entry,Creating joint ventures with firms already operating in these markets,.,Multinational Corporations(MNCs),Two increasingly applicable forms of operations:,Greenfield FDI:a company builds new facilities from scratch.occur when multinational corporations enter into developing countries to build new factories or stores.,Multinational Corporations(MNCs),Brownfield FDI:a company or government entity purchases or leases existing production facilities to launch a new production activity.,Note:the two are not exclusive to the FDI.,Multinational Corporations(MNCs),Growing power of MNCs,rapidly developing economies(RDEs),the BRIC countries,Aspirational goods,corporate social responsibility(CSR),Study Questions,Study Questions,1.What are major categories of
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