1. GLM 614 Foreign Direct Investment and
Emerging markets
Er Khagendra Bahadur Basnet
2. Introduction of Course
• Introduction and overview
• Theories of FDI
• Effect of FDI on host country
• Risk and FDI
• FDI in Nepal
• Dispute Resolution
• FDI in Nepal Methodology and Documentation
• Bilateral Investment Treaties (BIT) and others
Agreements
• Emerging Economics and FDI
• Assignment and Class Presentation
3. Course Plan
• Class participation & continuous evaluation
• Case study
• Internal Assessment
• Presentation
• Exam (Mid and Final)
5. Ancient Trade Between Europe & Asia
• Trade and bullion flow between Europe(high
population density) and Asia go back to
thousands of years.
• Around 5th century collapse of Rome due to
poor soil fertility, yield and taxation.
• Merchandise from Asia.
• India was sink for worlds precision metal.
• During rise of Ottoman empire there was
trade of textile, leather, fur and species.
6. Inventions of ancient China
• Ancient China contributed a vast body of
knowledge and technologies in many different
areas.
1. Papermaking in the first century,
2. Gunpowder and printing in the ninth century,
3. Compass in the eleventh century,
• Most of these technologies were known in
Europe only by the end of the Middle Ages.
• Many of the inventions and discoveries within
imperial China are directly related to
manufacturing
7. Ancient China
• Even before the imperial period, the Chinese used
wedges, inclined planes, screws, levers, and
pulleys, which they knew as the five labor-saving
jewels in ancient China .
• From the fifth century BCE, the Chinese used blast
furnaces to create pig iron, which was then melted
again in cupola furnaces to create cast iron.
• Hence, the Chinese regularly produced cast iron
about 1500 years before the first blast furnace
operated in the western world.
8. In 14th Century
• 10th to 14th century is called
as Commercial Revolution.
• Ship Building was improved
• Flanders are superior skill of
textile.
• The Silk Road (7000km) and
the Spice Route.
• Merchandise such as silks,
textile, porcelain, medicine,
cotton & latter tea.
9. Arsenal of Venice
• The doge of Venice, Ordelafo Faliero, established the arsenal
around 1104, initially as storage for ship supplies.
• After enlargement in 1320, the arsenal was able to produce about
six ships per year.
• However, the organization was still similar to a private shipyard,
with a guild master being responsible for part of the work but
having no fixed team of workers to work with.
• Over time, the arsenal changed from an unorganized small-scale
shipyard to the most productive shipyard in the world.
• At its peak, around the sixteenth century, the arsenal was the
largest industrial complex in Europe, employing up to 16,000
workers.
• Overall, the Arsenal of Venice made great breakthroughs in terms of
material flow and vertical integration, establishing the largest and
most productive shipyard and probably the largest workforce under
the same management of its time.
11. In 15th Fifteenth Century
• The four Italian city-states became the centre stage of
the Western European economy.
• Other countries and regions (Today’s Portugal, Spain,
Southern France, and Great Britain) is in great
suffered due to lacked industries to manufacture
tradable merchandise.
• That became the driving force of expeditions and
subsequent colonial expansion, together with religious
zeal in the case of Portugal and Spain.
• In 1493 sugar plantation experimentation in today’s
Ghana.
12. In 16th century
• Ottoman Empire, Venice, and Genoa and first-
generation winners (Portugal, Spain, and then
the Netherlands).
• The second-generation winner would emerge,
Great Britain, which would take over some of
the bounties from the hands of the first-
generation winners.
• The original people of the Americas, India, and
China were the looser.
13. British Colonial Empire and Industrial Policy:
• British colonization in seventeenth century and
the second—major one—in the eighteenth and
nineteenth centuries.
• The second phase coincided with the Industrial
Revolution.
• Between 1760 and 1860, the British (2%
population) share of the world’s industrial
output went up from 1.9% to 19.9%.
• British industries needed raw materials (cotton).
• By 1850, the UK produced half of the world’s
iron, coal, and lignite.
15. Edward III and his industrial policy
• It was not pure luck that the Industrial
Revolution first occurred in Great Britain.
• English attempts to develop the economy since
at least the thirteenth century, in particular by
supporting manufacturers and their exports.
• industrial policy consisting of technology
transfer and trade policy measures.
• Textiles and shipbuilding—which formed the
basis of British economic supremacy after the
seventeenth century
16. • Colonial laws reflected Britain’s desire that the
colonies did not establish manufacturing
industries and had to import manufactured
goods from Britain.
• British created a restrictive trade system in
which the colonies were to export raw
materials only to motherland,
• Export the manufactured goods back to the
colonies.
17. • Colonial laws reflected Britain’s desire that the colonies did not establish manufacturing
industries and had to import manufactured goods from Britain.
• The well-known ones were the Woollens Act (1699), the Hat Act (1732), and the Iron Act
(1750).
• The Woollens Act restricted the export of wool and production of woollen textiles in the
colonies to support their production in Britain.
• The Hat Act ̶ which Thomas Jefferson later characterized as a ‘despotic’̶ restricted the
manufacturing and exports of hats in the colonies.
• The Iron Act abolished the duties on exports of pig iron (an intermediate product) to Britain
from the colonies but prohibited the colonies from manufacturing finished iron products.
There were other laws to impede the development of important manufactured goods such as
rum, which at one point was done in 20 distilleries in New Port alone; the distillation of rum
in the colonies from sugar molasses obtained from West Indies was penalized heavily by an
act in 1733.
• All this effectively aimed at keeping the colonies as providers of raw materials and the
motherland as the manufacturing basis.
19. IRONMONGER AMBROSE CROWLEY
• One of the early large-scale industrialists was Sir Ambrose Crowley (1658–1713).
• He was born into a family of blacksmiths in Worchester, England, near
Birmingham.
• The British Navy, however, required enormous quantities of nails for shipbuilding,
which so far had been supplied by merchants purchasing them from small
workshop.
• He establish manufactory with economics of scale.
• Very soon in his career, he decided to move his factory to Sunderland, near
Newcastle upon Tyne in the north of England.
• This was a very unusual choice, since at this time, most nails were made in the
greater Birmingham region.
• Yet this decision clearly showed his entrepreneurial sense for profit. Sunderland
had both cheap labor and cheap coal.
• Furthermore, Sunderland being a coastal city, shipping to London was much
cheaper than from landlocked Birmingham.
• After some religious difficulties where his skilled but Catholic Belgian workers were
harassed by the Protestant locals in Sunderland, he moved his business to nearby
Winlaton, which also provided more space for expansion (Anderson 1973).
• His manufactories were soon probably the largest in England, with about 1000
workers (Crouzet 2008) and at least two large waterwheels in different sites
around Winlaton.
20. JOHN LOMBE’S SILK MILL
• John Lombe, from a Norfolk wool
merchant family, learn more about
silk processing.
• Northern Italy at that time was
offered the best quality and color silk
product by water-powered
machinery since at least 1276,
although on a smaller scale.
• Lombe traveling to Livorno, Italy, in
1714.
• Lombe sent these drawings back to
his brother in England, hidden in
bales of silk.
• To protect Italian intellectual
property, industrial espionage was
punished by death.
• Mechanized in larger scale
21. SIR RICHARD ARKWRIGHT AND THE CROMFORD
COTTON MILL—FULL-SCALE MECHANIZATION
• After the invention of the flying shuttle in
1733 by John Kay, weaving was much faster
than spinning, and demand for cotton yarn
increased tremendously.
• While there were some early machines for
spinning, these did not provide adequate
quality and were unsuitable for mass
manufacturing.
• In the 1770s, three major spinning
breakthroughs came in rapid succession.
• Richard Arkwright and John Kay* are
attributed with inventing the water frame,
patented in 1769, which mechanized the
stretching of the raw fibers.
• In 1770, James Hargreaves invented the
spinning jenny,† which mechanized the
twisting of the fibers.
• Finally, in 1780, Samuel Crompton invented
the spinning mule, combining the two
previous inventions and resulting in a roll of
finished yarn (Paz et al. 2010, p. 142).
22. COTTON MILL—FULL-SCALE MECHANIZATION
• Thomas Savery developed the
first steam engine—or more
correctly, steam pump—and
patented it in 1698
• A significant step forward was
by Thomas Newcomen, who,
in 1712, built the first actual
steam engine that converted
steam into mechanical
movement.
• Watt developed an improved
and more efficient engine in
1775 with condensor outside.
23. Use of steam Engine
• In 1779 James Pickard modify a steam
engine to provide a rotary motion.
• Around 1785 onward most steam
engines were rotary engines.
• Many of the rotary engines were used
in mining, from 1780 onward, more
and more steam engines were used to
drive manufacturing-related
machinery.
• Steam engines were used in textile
mills, to turn machinery, to pump air in
a blast furnace, to grind corn, and to
roll metal.
• Probably one of the earliest large
steam-powered factories was the
Albion Flour Mills in London, planned
to have 30 millstones and three steam
engines.
24. MATTHEW
BOULTON AND THE SOHO MANUFACTORY
• In 1765, he merged all production steps in a new manufactory,
naming it the Soho manufactory.
• Different from many other manufacturing operations of its time,
the Soho manufactory, from the beginning, employed full-time
workers rather than wandering journeymen.
• The Soho manufactory was based on individual workshops located
in production sequence.
• Some parts of the Soho manufactory used a high division of labor,
while others still utilized the expert artisan in charge of all steps of
production.
• In any case, pretty much all workshops used machines for
significant mechanization Soho manufactory established an engine
manufactory division, it never actually produced complete engines
but continued to produce toys in the form of valves and nozzles for
steam engines.
25. HONORÉ BLANC AND FRENCH
MUSKET PRODUCTION
• On July 8, 1785, Honoré Blanc set
up a stunning demonstration
• in the courtyard of the Chateau
de Vincennes. Taking parts
• for 25 locks at random from 50
disassembled locks, he assembled
25
• working locks without any filing
or fitting.
• Based on Blanc’s experience, the
French Army decided to set up an
• experimental workshop for the
production of interchangeable
parts
• for locks.
• Through this approach using
gauges and checks,
interchangeable parts
• for cannons and their carriages
were achieved. However, the
technical
• complexity of these products was
rather low. As for the cannon, the
only
• critical dimension was that the
ball had to fit the cannon
26. Germany and Chemicals
• Germany, on the other hand, did not yet have such a period of
extensive growth and was eager to catch up.
• Hence, from 1850s onward, Germany started to become the
leading chemical producer in Europe, if not the world.
• By 1895, Germany was the leading nation in the production of
artificial dyes, and by 1913, also in the production of sulfuric acid
(Landes 1969, p. 186ff).
• New products emerged frequently, changing the manufacturing
landscape.
• These included artificial fibers and leather, fertilizers, paper, dyes
and paints, etc.
• In many cases, the chemical industry enabled new products that
were impossible with the old ways, for example, plastics and
rubbers, photography, explosives, insecticides, pesticides, and many
others.
27. Samuel Slater and American
Industrialization
• Samuel Slater (1768–1835), an
experienced builder and mechanic
who had worked with Richard
Arkwright, the British textile pioneer.
• Breaking the English law against the
emigration of skilled experts, he
moved to America in 1789 being as
farmer.
• At the time, cloth was made in
hundreds of homes by farm wives and
their daughters, “put out” by various
merchants who provided raw
materials under the domestic system,
and occasionally made in a few small
textile factories with hand looms.
• Slater offered his services to replicate
Arkwright’s water frame. The result
was the nation’s first water-powered
textile mill, built at Pawtucket, Rhode
Island, in 1790.
• As Slater’s mills became more successful,
operating in some 15 separate locations by 1835,
he began to hire professional managers.
• Slater pioneered the use of factory ledgers to
determine the cost of producing a yard of cloth
and vertically integrated his business holdings,
moving forward to establish a sales office in New
York City and backward by employing buyers to
locate and purchase raw materials.
• Slater offers an excellent example of an early U.S.
entrepreneur who strategically responded to
technological, as well as foreign and domestic
competitive pressures.
• Hence, Slater is known as the father of the
American industrial revolution in the United States
but as Slater the Traitor in the United Kingdom.
28. American System of Manufacturing
• In the United States, as elsewhere, the use of interchangeable parts
began in arms manufacturing. Early private contractors, such as Eli
Whitney and Simeon North, had made small batches of arms using
interchangeable parts, but with limited success.12
• The Springfield (Massachusetts) Armory was established in 1795 as
a central workshop to bring weapons makers together to produce
armaments, although it did not really begin to apply improved
management techniques.
• Development of the iron rail, flanged wheel, and steam locomotive
began around 1830. U.S. canals and waterways, both natural and
artificial, primarily carried commercial freight.
• Opposed initially by canal operators, who were feared its
competition, by 1850, the rail industry had introduced a new
dimension to life in the United States.
29. idea of interchangeable parts
• The idea of interchangeable parts, however, was to
stay. While the French achieved interchangeable parts
already during the end of the eighteenth century, this
effort was forgotten in France only 30 years later.
• Yet, the spark of the idea made it to America. Similarly,
while the British achieved
• interchangeability using automatic machines around
1800—albeit for a much less complex part—this never
spread much outside of the British Navy.
• Only in America did the idea of interchangeable parts
and automatic machines spread outside of military
workshops.
30. • Yet, the spark of the idea made it to America. Similarly, while the British
achieved interchangeability using automatic machines around 1800—
albeit for a much less complex part—this never spread much outside of
the British
• Navy. Only in America did the idea of interchangeable parts and automatic
machines spread outside of military workshops.
• Numerous technicians and workers who learned their crafts in one of the
armories moved to other industries, bringing their ideas about
interchangeability with them.
• The production of sewing machines, typewriters, commercial firearms,
reapers, bicycles, and eventually the automobile all benefitted from the
developments at the Springfield and Harpers Ferry Armories.
• Hence, this system using interchangeable parts is known as the American
system of manufacturing, compared to the older British system of
manufacturing, where parts had to be fitted by hand during assembly
31. • Eli Whitney (1765–1825) is hailed as the inventor of the
cotton gin(a machine to separate cotton fibers from its
seeds), the milling machine, and interchangeable parts in
the U.S. armories and almost single-handedly invented the
American system of manufacturing.
• Surprisingly, in 1801, Whitney demonstrated the
interchangeability of his guns for President John Adams and
Vice President Thomas Jefferson by disassembling and
reassembling weapons at random. However, in all
likelihood, this was a carefully staged dog-and-pony show.
• The critical point of interchangeability was to swap the
high-tolerance metal parts of the complex lock mechanism
32. FW Taylor and Midvale steel
• In 1878 lathe operator Midvale steel works & by 1884 became chief engineer- task
management
• Time study: breaking down the task into individual steps and measuring their time useful
for piece rate wages.
• Old are not cooperate for time study and fired and new also hard to increase the output
and threats to death too but in 3 yrs after finning for machine repair cost for intentional
breakdown and putting in welfare fund he successes to got the increase output.
• In 1890 started consultancy work and popular
• Inspection of same quantity of bearing has to done for same wage in 10 hrs than
prevailing 10.5 hrs , initially resisted but later reduce to 10, 9.5 to 8.5 with 1/3
productivity rise.
• In 1898 joined Bethlehem steel as consultant & 25,000 workers and local are worried.
• A man loading of 12.5 ton/day pig iron to rail but capacity is calculated 48 ton/day and
later instituted piece rate and 47 tons/day by a man.
• Cost reduce to half and wage gain by 2/3 of before .
• President of ASME in 1906 .
• In 1911 publication of scientific management and acted as lecturer at Harvard University.
33. First Multination Company(MNC)
• Lock-stitch sewing machine
• 1846 Walter Hunt, Elias Howe,
• Isaac Singer Inventors struggled for
years to mechanize sewing.
• The solution was to use two threads.
• An eye-pointed needle pushed one
thread through the cloth from above
while a shuttle whizzing to and fro
below looped another thread
through it.
• Walter Hunt invented this in the US in
about 1843, and Elias Howe patented
the same idea in 1846, but we really
owe the sewing machine to US
inventor Isaac Singer.
• He added his own ideas to Howe’s
and turned a raw invention into a
mass-market product.
34. • 850: Isaac Merritt Singer invents the world’s first
practical sewing machine.
• 1851: Patent issued for the first SINGER brand
Sewing Machine on August 12, 1851.
• 1855: The SINGER brand is awarded the first prize
at the World’s Fair in Paris, France. That same
year, SINGER becomes the largest selling brand of
sewing machines internationally.
• 1858: SINGER brand introduces the first
lightweight domestic machine, the Grasshopper™.
• 1865: SINGER brand delivers the “New Family”
Sewing Machine. US Civil War Ends.
• 1870: SINGER Brand Red “S” girl trademark makes
her debut. Her trademark is produced in several
languages, becoming one of the most recognized
trademarks in the world.
• 1889: SINGER brand introduces the first practical
electric sewing machine
• 1890: SINGER brand reaches 90% market share
globally.
35. Dimension of ID
1. Innovation
– Invention
– Entrepreneurship
2. Technology Transfer
3. Institutions and Management
