1.0 Introduction
Based on OECD Factbook 2013: Economic, Environmental and Social Statistics, Foreign direct investment defined as cross-border investment by other investors from the economy that had the objective to gain long term interest or benefit from other countries that need capital for development. FDI have divided into 3 categorty such as Horizontal FDI, plaform FDI and vertical FDI. Kimberly state that Foreign direct investment is global economic growth which are apply in all countries such as developing and emerging market countries. The main purpose of FDI that the investor from other countries invests the surplus capital to other countries to gain benefit. At same time, the developing countries will gain more advanatge on capital, technology transfer and human skill that increase the development of the countries.
The developing country always needs the fund or financial aid from all resources for developing their country. FDI are made by the multinational companies for the expansion towards the developing countries based on the country’s condition. What is foreign direct investment (FDI)? Foreign direct investment is the investment made by the multi-national company into other country through fund or investments which directly invest into the company. Foreign direct investment is different from indirect investment such portfolio flows or equities listed on a nation's stock exchange. FDI is divided into horizontal, vertical and conglomerate. Besides that, FDI can used to take over other country companies and Greenfield entry. The International Monetary fund (1977) mentioned that FDI is a investment that made to acquire a lasting interest in an enterprise operating in an economy by the investor which interest for havi...
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...rovide as be the introduction and the objective of our research while the chapter 2 will preview the literature review which related to previous study about relationship between the stock price and foreign direct investment. In chapter 3, the Methodology of our study will provide as the guideline for chapter 4 and 5. . While in chapter 4 and 5, we will come out with the result and make a conclusion based on the result that we get.
1.6 Methodology
In this study, we estimate the relationship between stock market and FDI which are in the long-term relationship by using Johnansen cointergration approach. Besides that, we measure the short term relationship between stock market and FDI by using using var approach. The variable in this study are the stock market trade volume, exchange rate, inflation rate and foreign direct investment from Indonesia, china and Malaysia
The fact that majority of the capital funds was in the form of portfolio capital instead of foreign direct investment (FDI) had also worsen the situation. The ratio of portfolio capital to FDI had increased substantially from 1:1.3 in 1990 to 1:6.5 in 1993. Given the volatile nature, portfolio capital tends to respond with greater speed to changes in the environment.
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
Since foreign aid programs are here to stay, it is important to focus on the enormous potential for foreign aid to be effective. One such way is through augmenting a state’s ability to attract foreign direct investment (FDI). FDI is a good option because it has the potential to be a more long-term solution than pub...
FDI in Japan started to increase during the second half of the year 1990s. This is due to the rate of FDI outflows is higher than inflows rate in Japan on that time. According to the past sources, FDI outflows from Japan had reached to the 7352 billion yen in the year of 1990s, while the FDI inflows into Japan just only about 262 yen on that time. That is shown the FDI inflows rate was 28 times lower than the outflows rate. Due to the increasing of inflows rate in 1992 and go on growing until the year of 1999 had reduce the gaps of these two rates...
Some investors are wary about the process of investing internationally, carrying the concept that it is always to precarious and complex. While there are risks involved with international investing, there are also very beneficial and profitable reasons for doing so. Ev...
The inventory turnover decreased from 3.8 to 3.59. This is explained by the higher increase in the average inventory (37%) than the increase in cost of sales (29%) during 2005. This means that the rate at which inventory is sold is dropping
Saudi Arabia’s capital market is considered to be young compared to other financial markets in the region. Saudi financial markets have been developing slowly because most enterprises in the country are either government owned or family-owned, most of which was funded through state budget, and as a result reduced the need for financing. In the recent past, Saudi Arabia has focused on a careful measurement for structural developments and regulatory changes. However, different phases of historical development of the capital market which can be classified into three phases; pre-industrialization phase, post industrialization phase and growth phase that sparked changes and shaped the kingdom 's capital market on
Woodward, D. (2001). The next crisis?: Direct and equity investment in developing countries. London: Zed Books.
The stability of currency values plays a significant role for economic and financial stability. It is not difficult to see the exchange rate fluctuations are widely regarded as damaging. As the movements of the exchange rate have significant and large effects on the trade balance, resource allocation, domestic prices, interest rate, national income and other key economic variables. Then can exchange rate movements be predicted by these fundamental economic variables?
Choosing two profitable stocks amongst a myriad of potential alternatives is a daunting task to say the least. In order to narrow my choices from thousands to two, I examined several aspects of companies I was interested in. Among these were, company overview, alpha and beta ratings, price ratios, price charts, and company headlines. After evaluating this information, I chose Intuit INC (INTU) listed on the NASDAQ and Johnson and Johnson (JNJ) listed on the NYSE.
A multinational enterprise (MNE) is an organisation that holds a hefty equity share; usually fifty percent or more of another organisation, functioning in an overseas country. The multinational enterprise (MNE) can be formed when an organisation in one country makes an impartiality investment in an organisation, in another country. Foreign direct investment (FDI) is an investment in an overseas organisation where the overseas financier holds at least ten percent of the average shares, accepted with the objective of proven a ‘lasting interest’ overseas, a durable bond and momentous influence on the management o...
... A lot of companies have directly invested in developing countries like Brazil and India by starting production units, but what we also need to see is the amount of Foreign Direct Investment (FDI) that flows into the developing countries. Companies which perform well attract a lot of foreign investment and thus push up the reserve of foreign exchange. CONCLUSION Globalization In conclusion, international business is best described as globalization.
Sukar, A., Ahmed, S., & Hassan, S. (n.d.). THE EFFECTS OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH. Southwestern Economic Review.
The companies seek markets to do direct investment which it is relatively cheaper or has a low cost of production or operations. To remain competitive, it is important for companies to produce their goods and services at low cost. Globalization has permitted companies to set up their offices and production units in other countries that have abundant resources at low cost. A country’s financial climate is one of major fuel in the influencing of globalization. It can be a magnet which attracts investments, say for example China there is an abundance of cheap labour, vast technologies and the know how therefore persons/ countries will prefer to sent things to be manufactured here, thus will fuel china’s economy. In countries with regard to an oversupply of labor companion to capital which is the row in largest disobedient countries the contrariwise resolution occurs. The international economic integration is also related to the cost management as the business and trading costs differ from one nation to another. Therefore, the respective economic integration process enables the organizations to select and choose in which part of the country they want to operate. Another reason a company thinks about globalizing is because the economy rises, the cost of development also decreases and the number of products increase. Therefore, it can attain economies of scale
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