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Lecture 5 FDI.ppt

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Lecture 5 FDI.ppt

  1. 1. Foreign Direct Investment (FDI)in Emerging Markets
  2. 2. COMPANIES COLLABORATE • Companies collaborate (use alliances that are often called strategic alliances) abroad for much of the same reasons they do so domestically. However, there are some reasons specific to international operations. • Both domestically and internationally, companies collaborate to spread and reduce costs, enable them to specialize in their competencies, avoid competition, secure vertical and horizontal links, and gain knowledge.
  4. 4. • Collaborative Strategy and Complexity of Control • The more equity a firm puts into collaborative arrangement, coupled with the fewer partners it takes on, the more control it will have over the foreign operations conducted under the arrangement. • Note that non-equity arrangements typically entail at least one and often several partners.
  5. 5. 1. MANAGEMENT CONTRACTS • An organization may pay for managerial assistance under a management contract when it believes another can manage its operation more efficiently than it can, usually because the contractor has industry-specific capabilities. • Such contracts are common when host governments want foreign expertise, but do not want foreign ownership. • In turn, the management company receives income without having to make a capital investment. • Airport operations, Hotels management contracts are also popular. • In essence, host-country real estate owners may have good hotel locations, but know little about running a hotel. • At the same time, many hotel chains have been shying away from property ownership abroad because of the perceived risk.
  6. 6. 2. TURNKEY OPERATIONS • Companies handling turnkey operations are usually industrial-equipment manufacturers, construction companies, or consulting firms. • Manufacturers also sometimes provide turnkey services when they are disallowed to invest. The customer for a turnkey operation is often a governmental agency. • Recently, most large projects have been in those developing countries that are moving rapidly toward infrastructure development and industrialization. Contracting to Scale • One characteristic setting turnkey business is the size of contracts, frequently for billions of dollars.. • Some projects are so large that they are handled by a consortium of turnkey operators, such as the additional wider channel for the Panama Canal, led by Spain’s Sacyr Vallehermoso. • Often, smaller firms serve either as subcontractors for primary turnkey suppliers or specialize in a particular sector, such as the handling of hazardous waste. Making Contacts • The nature of these contracts places importance on hiring executives with top- level governmental contacts abroad, as well as on ceremony and building goodwill, such as opening a facility on a country’s national holiday or getting a head of state to inaugurate a facility. Although public relations is important to gain contracts, other factors—price, are necessary to sell contracts of such magnitude
  7. 7. Marshaling Resources • Many turnkey contracts are in remote areas, necessitating massive housing construction and importation of personnel. Projects may involve building an entire infrastructure under the most adverse conditions, such as Bechtel’s complex for Minera Escondida high in the Andes, so turnkey operators must have expertise in hiring people willing to work in remote areas for extended periods and in transporting and using supplies under very difficult conditions. • If a company has a unique capability, such as the latest refining technology, it will have little competition. As the production process becomes known, however, competition increases. • Companies from developed countries have moved largely toward projects involving high technology, whereas those from such countries as China, India, Korea, and Turkey can compete better for conventional projects requiring low labor costs. • The Chinese companies, China State Construction Engineering and Shanghai Construction Group, have worked on subway systems in Iran and Saudi Arabia, a railway line in Nigeria, a tourist complex in the Bahamas, an oil pipeline in Sudan, and office buildings in the United States
  8. 8. 3. FRANCHISING • Franchising, a specialized form of licensing, the parties act almost as a vertically integrated company because they are interdependent and each creates part of the product or service that ultimately reaches the consumer. • Franchisors once depended on trade shows and costly visits to foreign countries to promote their expansion. • While such trade shows are still important, especially for young franchising operations that are not well-known, the Internet has given companies another channel to exchange information.
  9. 9. Franchise Organization • A franchisor may deal directly with individual franchisees abroad or set up a master franchise that has rights to open outlets on its own or to develop sub-franchisees in the country or region. • Sub-franchisees pay royalties to the master franchisee, which then remits some predetermined percentage to the franchisor. • Companies are most apt to use a master franchise system when they are not confident about evaluating potential individual franchisees and when overseeing and controlling them directly would be too expensive.
  10. 10. Operational Modifications • Franchising success generally depends as well on product and service standardization, high identification through promotion, and effective cost controls. • The latter two are pretty straightforward, but transferring the home country’s product and service, especially for food franchising, is often difficult, first, because of local supplies. • McDonald’s, for instance, had to build a plant to make hamburger buns in the United Kingdom, while in Thailand it had to help farmers develop potato production. • Second, foreign country taste preferences may differ from those in the home country—even within regions of large countries. • In China, for example, Yum! Brands offers regionally different food in its KFC and Pizza Hut outlets. • However, the more adjustments made for the host consumers’ different tastes, the less a franchisor has to offer a potential franchisee.
  11. 11. 4. LICENSING • Licensing involves granting a foreign entity (the licensee) the right to produce and sell the firm’s product in return for a royalty fee on every unit sold. • The rights for use of intangible property may be for an exclusive license (the licensor can give rights to no other company for the specified geographic area for a specified period of time) or a nonexclusive one. • The U.S. Internal Revenue Service classifies intangible property into five categories: 1. Patents, inventions, formulas, processes, designs, patterns 2. Copyrights for literary, musical, or artistic compositions 3. Trademarks, trade names, brand names 4. Franchises, licenses, contracts 5. Methods, programs, procedures, systems • Usually, the licensor is obliged to furnish sufficient information and assistance, and the licensee is obliged to exploit the rights effectively and pay compensation to the licensor.
  12. 12. So why do so many firms apparently prefer FDI over either exporting or licensing? Limitations of Exporting • The viability of exporting physical goods is often constrained by transportation costs and trade barriers. • When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. • This is particularly true of products that have a low value-to-weight ratio and that can be produced in almost any location. • Transportation costs aside, some firms undertake foreign direct investment as a response to actual or threatened trade barriers such as import tariffs or quotas. • by protectionist threats from Budget and by tariffs on the importation Limitations of Licensing • internalization theory/market imperfection approach • First, licensing may result in a firm’s giving away valuable technological know-how to a potential foreign competitor. • A second problem is that licensing does not give a firm the tight control over production, marketing, and strategy in a foreign country that may be required to maximize its profitability (tight control is in FDI). • A third problem with licensing arises when the firm’s competitive advantage is based not as much on its products as on the management, marketing, and manufacturing capabilities that produce those products. ( lean could not be same lean when used by other than Toyota)
  13. 13. All of this suggests that when one or more of the following conditions holds, markets fail as a mechanism for selling know-how and FDI is more profitable than licensing: (1) When the firm has valuable know-how that cannot be adequately protected by a licensing contract, (2) When the firm needs tight control over a foreign entity to maximize its market share and earnings in that country, and (3) When a firm’s skills and know-how are not amenable to licensing.
  14. 14. 5. Sales Contract • A sales contract is a formal agreement between a seller and a buyer laying out the terms and conditions for which the sale of goods is carried out.
  15. 15. JOINT VENTURES (JVs) • JVs may involve more than two companies and ones in which a partner owns more than 50 percent. • For example, Flagship Ventures (U.S.), AstraZeneca (U.K.-Sweden), Nestlé Health Science (Switzerland), and Bayer CropScience (Germany) have joined together to develop health-care innovations. • When more than two organizations participate, the venture is sometimes called a consortium. • JVs may also involve a partner owning over 50 percent, such as ANA’s ownership of 67 percent in AirAsia Japan. • Two companies from the same country joining together in a foreign market (e.g., NEC and Mitsubishi [Japan] in the United Kingdom) • A foreign company joining with a local company (e.g., Barrick [Canada] and Zijin Mining Group in China) • Companies from two or more countries establishing a joint venture in a third country (e.g., Mercedes-Benz [Germany] and Nissan [Japan] in Mexico)
  16. 16. • A private company and a local government forming a joint venture, or mixed venture (e.g., Mitsubishi [Japan] with the government- owned Exportadora de Sal in Mexico) • A private company joining a government-owned company in a third country (e.g., BP Amoco [private British-U.S.] and Eni [government- owned Italian] in Egypt) • The more companies in the JV or any alliance, the more complex its management becomes. • Development of the Boeing 787 (the Dreamliner) and the Airbus A380 were joint efforts among numerous companies from several countries. • The projects were difficult to control, and a delay or performance hitch by any participating company delayed the others and caused project problems.
  17. 17. EQUITY ALLIANCES • An equity alliance is a collaborative arrangement in which at least one of the companies takes an ownership position (almost always minority) in the other(s). • For instance, the Port of Antwerp (Belgium) took a minority position in Essar Ports (India) when the two signed a long-term alliance to mutually improve quality and productivity. • In some cases, each party takes an ownership in the other, such as occurred with Panama-based Copa and Colombia based AeroRepublic (airlines). • The purpose of the equity ownership is to solidify a collaborating contract, such as a supplier–buyer contract, so that it is more difficult to break—particularly if the ownership is large enough for the investing company to secure a board membership
  18. 18. History of Foreign Investment • In the nineteenth century, foreign investment was prominent, but it mainly took the form of lending by Britain to finance economic development in other countries as well as the ownership of financial assets. • Prior to l890, British investment were primarily in the consumer goods sector with concern about enhancing access to the British market. • Singer Manufacturing Company made enthusiastic commitment to FDI, the company emerged as the world’s first modern MNC and was one of the largest firms in the world by l900.
  19. 19. • In the interwar period of the twentieth century, foreign investment declined, but direct investment rose to about a quarter of the total. • This period was that Britain lost its status as the major world creditor, and the USA emerged as the major economic and financial power. • In the post-Second World War period, FDI started to grow, for two reasons. 1. Technology- the improvement in transport and communications which made it possible to exercise control from a distance. 2. Reconstruction following the damage inflicted by the war
  20. 20. The 1980s witnessed two major changes and saw a surge in FDI. 1. Low saving rate in the US economy, making it impossible to finance the widening budget deficit by resorting to the domestic capital market, and giving rise to the need for foreign capital, which came primarily from Japan and Germany. 2. Restrictive trade policy adopted by the USA.
  21. 21. • In the period l990–2, FDI flows fell as growth in industrial countries slowed, but a strong rebound subsequently took place. • This rebound is attributed to three reasons: – (i) FDI was no longer confined to large firms, as an increasing number of smaller firms became multinational; – (ii) the sectoral diversity of FDI broadened, with the share of the service sector rising sharply; and – (iii) the number of countries that were outward investors or hosts of FDI rose considerably.
  22. 22. The average yearly outflow of FDI By 2016 the global stock of FDI was about $26 trillion
  23. 23. FDI inflow as region of the country
  24. 24. Cumulative FDI outflows, 1998–2016 ($ billions).
  25. 25. Source country(above slide too) • In 2005, Chinese firms invested some $12 billion internationally. Since then, the figure has risen steadily, reaching a record $134 billion in 2016. • Firms based in Hong Kong accounted for another $108 billion of outward FDI in 2016 • Much of the outward investment by Chinese firms has been directed at extractive industries in less developed nations (e.g., China has been a major investor in African countries). • A major motive for these investments has been to gain access to raw materials, of which China is one of the world’s largest consumers.
  26. 26. • United States has been an attractive target for FDI because of its large and wealthy domestic markets, its dynamic and stable economy, a favorable political environment, and the openness of the country to FDI • Most recent inflows into developing nations have been targeted at the emerging economies of Southeast Asia. • Driving much of the increase has been the growing importance of China as a recipient of FDI, which attracted about $60 billion of FDI in 2004 and rose steadily to hit a record $134 billion in 2016.
  27. 27. FDI Adv & Dis. adv.
  28. 28. What is Foreign Direct Investment Foreign direct investment (FDI) is the process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country).
  29. 29. • The International Monetary Fund’s Balance of Payment Manual defines FDI as ‘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’. • The United Nations 1999 World Investment Report (UNCTAD, 1999) defines FDI as ‘an investment involving a long- term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise, affiliate enterprise or foreign affiliate)’
  30. 30. Foreign Investment • As per Foreign investment and Technology Transfer Act 2018 (FITTA): "Foreign Investment" means the following investment made by a foreign investor in any industry" • a. Equity Investment in a new industry in foreign currency • b. Investment through purchase of shares of an existing industry • c. Reinvestment of dividend earned from foreign investment • d. Investment through capital investment fund • e. Investment through technology transfer in the form of patent, design, trademark etc. • f. Lease investment • "Foreign Investor" means any foreign individual, firm, company or corporate body involved in foreign investment or technology transfer including foreign government or international agency.
  31. 31. TYPES OF FDI FDI can be classified from the perspective of the investor (the source country) and from the perspective of the host country. From the perspective of the investor, 1. Horizontal FDI, 2. Vertical FDI, 3. Conglomerate
  32. 32. Horizontal FDI • The affiliate industry (in host country) replicates the production process that the parent MNC firm undertakes in (its source country facilities) elsewhere in the world; • Horizontal FDI is undertaken for the purpose of horizontal expansion to produce the same or similar kinds of goods abroad (in the host country) as in the home country. • Hence, product differentiation is the critical element of market structure for horizontal FDI. • horizontal FDI is undertaken to exploit more fully certain monopolistic or oligopolistic advantages, such as patents or differentiated products, particularly if expansion at home were to violate anti-trust laws (competition laws). • Toyota has replicated the production process for its most popular car model, the Corolla, in assembly plants in Brazil, Canada, China, India, Japan, Pakistan, South Africa, Taiwan, Thailand, Turkey, the United States, the United Kingdom, Vietnam, and Venezuela
  33. 33. The Horizontal FDI Decision • If a firm wants to reach customers in (host country) Foreign, it has only one possibility: export and incur the trade cost t per unit exported. • Let’s now introduce the choice of becoming a multinational via horizontal FDI: A firm could avoid the trade cost t by building a production facility in Foreign. • Of course, building this production facility is costly and implies incurring the fixed • cost F again for the foreign affiliate.
  34. 34. • The firm’s export versus FDI choice will then involve a trade-off between the perunit export cost t and the fixed cost F of setting up an additional production facility. • Any such trade-off between a per-unit and a fixed cost boils down to scale. • If the firm sells Q units in the foreign market, then it incurs a total trade-related cost Q * t to export; this is weighed against the alternative of the fixed cost F. • If Q > F/t, then exporting is more expensive, and FDI is the profit-maximizing choice.
  35. 35. Vertical FDI • firm’s decision to break up its production chain and move parts of that chain to a foreign affiliate will also involve a trade-off between per-unit and fixed costs—so the scale of the firm’s activity will again be a crucial element determining this outcome. • Vertical FDI is undertaken for the purpose of exploiting raw materials (backward vertical FDI) or to be nearer to the consumers through the acquisition of distribution outlets (forward vertical FDI). • In vertical FDI, the key cost saving is not related to the shipment of goods across borders; rather, it involves production cost differences for the parts of the production chain that are being moved. This cost differences stem mostly from comparative advantage forces
  36. 36. • Intel (the world’s largest computer chip manufacturer) has broken up the production of chips into wafer fabrication, assembly, and testing. • Wafer fabrication and the associated research and development are very skill-intensive, so Intel still performs most of those activities in the United States as well as in Ireland and Israel (where skilled labor is still relatively abundant). • On the other hand, chip assembly and testing are labor intensive, and Intel has moved those production processes to countries where labor is relatively abundant, such as Malaysia, the Philippines, Costa Rica, and China. • The vertical FDI is one of the fastest-growing types of FDI and is behind the large increase in FDI inflows to developing countries
  37. 37. Trends in Global Supply Chains and Sourcing
  38. 38. Iphone 7 • Consumer will pay much more than that for the phone (the unsubsidized price is $649). • Apple, this transaction is recorded as a $225 import from China (where the iPhone is assembled and tested). • Of the $225 total cost, only $5 represents assembly and testing costs (performed in China). • The remaining $220 represents the iPhone’s component costs, which are overwhelmingly produced outside of China. • The manufacturing of these components is spread throughout Asia (Korea, Japan, and Taiwan are the largest suppliers), Europe, and the Americas.
  39. 39. The Vertical FDI Decision • A firm’s decision to break up its production chain and move parts of that chain to a foreign affiliate will also involve a trade-off between per-unit and fixed costs—so the scale of the firm’s activity will again be a crucial element determining this outcome. • When it comes to vertical FDI, the key cost saving is not related to the shipment of goods across borders; rather, it involves production cost differences for the parts of the production chain that are being moved. • those cost differences stem mostly from comparative advantage forces. • We will not discuss those cost differences further here, but rather ask why—given those cost differences—all firms do not choose to operate affiliates in low-wage countries to perform the activities that are most labor-intensive and can be performed in a different location. The reason is that, as with the case of horizontal FDI, vertical FDI requires a substantial fixed cost investment in a foreign affiliate in a country with the appropriate characteristics. • Again, as with the case of horizontal FDI, there will be a scale cutoff for vertical FDI that depends on the production cost differentials on one hand, and the fixed cost of operating a foreign affiliate on the other hand. • Only those firms operating at a scale above that cutoff will choose to perform vertical FDI.
  40. 40. Conglomerate FDI A conglomerate is the combination of two or more corporations operating in entirely different industries under one corporate group, usually involving a parent company and many subsidiaries. A conglomerate is a multi-industry company. It involves both horizontal and vertical FDI.
  41. 41. TYPES OF FDI • From the perspective of the host country, FDI can be classified into 1. Import-substituting FDI; 2. Export-increasing FDI; 3. Government-initiated FDI.
  42. 42. Import-substituting FDI • Import-substituting FDI involves the production of goods previously imported by the host country, necessarily implying that imports by the host country and exports by the investing country will decline. • This type of FDI is likely to be determined by the size of the host country’s market, transportation costs and trade barriers.
  43. 43. Export-increasing FDI Export-increasing FDI, on the other hand, is motivated by the desire to seek new sources of input, such as raw materials and intermediate goods. This kind of FDI is export-increasing in the sense that the host country will increase its exports of raw materials and intermediate products to the investing country and other countries (where the subsidiaries of the multinational corporation are located).
  44. 44. Government-initiated FDI • Government-initiated FDI may be triggered, for example, when a government offers incentives to foreign investors in an attempt to eliminate a balance of payments deficit. • FDI is either trade-orientated FDI (which generates an excess demand for imports and excess supply of exports at the original terms of trade) or anti-trade-orientated FDI, which has an adverse effect on trade.
  45. 45. APPROACHES TO INTERNATIONAL BUSINESS Common sequence that firms use to develop foreign markets for their products: 1. Export of the goods produced in the source country. 2. Licensing a foreign company to use process or product technology. 3. Foreign distribution of products through an affiliate entity. 4. Foreign (international) production, which is the production of goods and services in a country that is controlled and managed by firms headquartered in other countries.
  46. 46. Moving from step l to step 4 requires a larger commitment of resources, and in some respects greater exposure to risk. While this sequence may be a chronological path for developing foreign sales, it is not necessary that all four steps are taken sequentially, as some firms jump immediately to step 3 or step4. Steps 3 and 4 involve FDI.
  47. 47. UNCTAD (l999) identifies the following characteristics of inter- national production: 1. International production arises when a firm exercises control over an enterprise located abroad, whether through capital investment or through contractual arrangements. 2. Technology flows play an important role in international production. 3. Innovation and research & development are at the heart of the ownership advantages that propel firms to engage in international production. 4. International trade is stimulated by international production because of the trading activities of MNCs. 5. International production generates employment opportunities that are particularly welcome in host countries with high rates of unemployment. 6. Financial flows associated with international production consists of funds for financing the establishment, acquisition or expansion of the foreign affiliates. 7. The capital base of international production, regardless of how it is financed, is reflected in the value of assets of foreign affiliates. • “The choice between exporting and FDI depends on the following factors: profitability, opportunities for market growth, production cost levels, and economies of scale.”
  48. 48. FDI may take one of three forms 1. Greenfield investment, 2. Cross- border mergers and acquisitions (M&As) 3. Joint ventures.
  49. 49. Greenfield investment • Greenfield investment occurs when the investing firm establishes new production, distribution or other facilities in the host country. This is normally welcomed by the host country because of the job-creating potential and value-added output. • Ex: Pre fab Panel, Britannia Biscuit, Kasai
  50. 50. Merger & Acquisition • FDI may occur via an acquisition of, or a merger with, an established firm in the host country (the vast majority of M&As are indeed acquisitions rather than mergers). • This mode of FDI has two advantages over greenfield investment: – (i) it is cheaper, particularly if the acquired project is a loss-making operation that can be bought cheaply; and – (ii) it allows the investor to gain a quick access to the market. • Firms may be motivated to engage in cross-border acquisitions to bolster their competitive positions in the world market by acquiring special assets from other firms or by using their own assets on a larger scale. • The extent of failure depends crucially on the success criteria, which means that the failure rate may be high or low, depending on these criteria • Ex ; one gas, Nepal Distillery
  51. 51. Joint Ventures • FDI can also take the form of joint ventures, either with a host country firm or a government institution, as well as with another company that is foreign to the host country. • One side normally provides the technical expertise and its ability to raise finance, while the other side provides valuable input through its local knowledge of the bureaucracy as well as of local laws and regulations.
  52. 52. Buckley and Casson present a model that explains the formation of joint ventures in terms of nine distinct factors: (i) market size; (ii) pace of technological change; (iii) interest rates; (iv) cultural distance; (v) protection of independence; (vi) missing patent rights; (vii) economies of scope; (varieties of products) (viii) technological uncertainty; and (ix) economies of scale.
  53. 53. Country selection criteria for Foreign investment 1. Foreign Market, where manufacturing and or service facilities are developed to cater the local market need as well as optimal facility in the global distribution network. In this connection Chinese firm can investment in Nepal to meet the demand of product in Nepal or second highest populated country India via Nepalese facility.
  54. 54. 2. Efficiency seeking industry can invest in the country where cost of production could be lower due to lower cost locations for operations, in particular in the lower labour cost and availability of energy. 3. Resources seeking investor could be invest in resources sector to acquire or secure the supply of raw materials and energy sources.
  55. 55. Theories of FDI
  56. 56. Why theories of FDI • The importance of and growing interest in the causes and consequences of FDI has led to the development of a number of theories that try to explain ; 1. Why MNCs indulge in FDI, 2. Why they choose one country in preference to another to locate their foreign business activity, and 3. Why they choose a particular entry mode. 4. Why some countries are more successful to attract more FDI than other countries.
  57. 57. Theories of FDI may be classified as: A. Theories assuming perfect markets; – A market in which buyers and sellers have complete information about a particular product and it is easy to compare prices of products because they are the same as each other etc. B. Theories assuming imperfect markets; C. Theories based on other Factors. D. Other variables to affect FDI:
  58. 58. A. THEORIES ASSUMING PERFECT MARKETS Three hypotheses fall under this heading: 1. The differential rates of return hypothesis, 2. The diversification hypothesis, and 3. The output and market size hypothesis.
  59. 59. 1. Differential rates of return hypothesis • Capital flows from countries with low rates of return to countries with high rates of return move in a process that leads eventually to the equality of ex ante real rates of return. • The rationale for this hypothesis is that firms considering FDI behave in such a way as to equate the marginal return on and the marginal cost of capital • The hypothesis is risk neutrality, making the rate of return the only variable upon which the investment decision depends. • Risk neutrality in this case implies that the investor considers domestic and foreign direct investments to be perfect substitutes, or in general that direct investment in any country, including the home country, is a perfect substitute for direct investment in any other country. • A rate of return differential implies capital flows in one direction only, from the low-rate country to the high-rate country, and not vice versa. . • the differential rates of return hypothesis does not explain why a firm indulges in FDI rather than portfolio investment.
  60. 60. 2. Diversification Hypothesis • Risk is consider as another variable upon which the FDI decision is made. • The choice among various projects is by expected rate of return as well as risk. • Risk reduction will be done via diversification that is relevant to portfolio. • Capital mobility will be constrained by the desire to minimize or reduce risk, which is achieved by diversification. • Why MNCs are the greatest contributors to FDI, and why they prefer FDI to portfolio investment? – Financial market imperfections & less degree of control
  61. 61. 3. The Market Size Hypothesis • The volume of FDI in a host country depends on its market size, which is measured by the sales of an MNC in that country, or by the country’s GDP (that is, the size of the economy). • This is particularly so for the case of import-substituting FDI. • As soon as the size of the market of a particular country has grown to a level warranting the exploitation of economies of scale, the country becomes a potential target for FDI inflows. • Sufficiently large market allows for the specialization of the factors of production, and consequently the achievement of cost minimization. • A number of survey studies have also dealt with market size as a determinant of FDI.

Hinweis der Redaktion

  • Figure shows that as a company increases the number of partners and decreases its portion of equity in a foreign operation, its ability to control that operation decreases.
  •  easily persuaded or controlled
  • Simultaneously buying and selling securities, bonds etc