Foreign Direct Investment (FDI) and Political Institutions

2674 Words6 Pages
bulb-icon

Recommended: Issues of international political economy

How do political institutions affect foreign direct investment? The field of International Political Economy (IPE) have seen a tremendous amount continuous change in both the past and recent time. The climate and conditions within the theoretical and practical aspects of the field are ever-changing and have led to a volatile political and economic landscape to form. This essay will focus on one aspect of IPE that have relatively quickly risen to become imperatively influential and important for the developments in the field, that aspect is Multinational Companies (MNC) and their Foreign Direct Investments (FDI). MNC’s role and the importance of FDI are multifaceted within the international sphere; the use of FDI does not only constitute possible cuts in production cost and increased revenue for the investor but FDI is today an important aspect for state economies as well. FDI does today represent a large part of many states’ GDP and is also a vital part in progressing economic growth and development the developing world. The dynamics of FDI are complex, the involved actors; MNC’s and state governments act within different perimeters. The aims and goals of the involved actors are not always in sync but the outcomes might be beneficial for both despite this. Numerous studies have throughout the time been conducted on the dynamics of FDI. This essay will focus on the role of domestic and international institutions in relation to FDI. What role does institutions plays in attracting FDI, does certain types of institutions succeed in attracting more FDI than others and why the situation is so, are central questions to assess to understand the relations of MNC’s, FDI and states. The analysis will focus on three different dimensions of... ... middle of paper ... ...//econ.worldbank.org OECD Statistics FDI Inflows, Russian Federation. Available at: http://www.oecd-ilibrary.org/economics/country-statistical-profile-russian-federation_20752288-table-rus [accessed 14 January 2014] OECD Country Risk Classifications of the Participants to the Arrangement on Officially Supported Export Credits. Available from: http://www.oecd.org/tad/xcred/cre-crc-current-english.pdf [accessed January 15 2014] UNCTAD Statistics FDI Inflows, Available from: http://unctadstat.unctad.org/TableViewer/tableView.aspx [accessed January 17 2014] World Bank Statistics Statistics of FDI Inflows. Available from: http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD [accessed January 14 2014] Websites Brunei | Freedom House. 2014 [ONLINE] Available at: http://www.freedomhouse.org/report/freedom-world/2008/brunei#.UtqTsM-vncc. [Accessed 16 January 2014].

Show More
Related

  • Anheuser-Busch and France

    2192 Words  | 5 Pages

    Country Reports on Economics, Policy and Trade Practices: Courtesy of UM- St Louis. (2000). Available:gopher://gopher.umsl.edu:70/00/library/govdocs/crpt/crpt0029

    Read More

  • Modern Golden Age: Is the U.S. in its Golden Age?

    726 Words  | 2 Pages

    "Economy & Trade." Office of the United States Trade Representative. Office of the United States Trade Representative, n.d. Web. 19 Apr. 2014.

    Read More

  • Governmental Involvement in the Business World

    435 Words  | 1 Pages

    1970s and 80s when they realized that the New Deal ideas that were passed in an

    Read More

  • European Union and the North American Free Trade

    2910 Words  | 6 Pages

    http://www.wto.org. 2013. WTO | Regional Trade Agreements gateway. [ONLINE] Available at: http://www.wto.org/english/tratop_e/region_e/region_e.htm. [Accessed 02 December 2013].

    Read More

  • Are Sweatshops Better Than No Jobs at All?

    1004 Words  | 3 Pages

    Academic Consortium on International Trade (2000) Letter to Presidents of Universities and Colleges. Available at: http://www.spp.umich.edu/rsie/acit/ [Accessed 1 April 2014]

    Read More

  • Foreign Direct Investment in China

    1419 Words  | 3 Pages

    ...itten the full word Foreign direct investment and then in the brackets he has put the abbreviation (FDI).

    Read More

  • Foreign Aid Case Study

    3225 Words  | 7 Pages

    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...

    Read More

  • Critique of the Internalization Theory and Eclectic Paradigm

    1789 Words  | 4 Pages

    A Multinational Corporation (MNC) can be defined as “a single entity that controls and manages group of goal-disparate and geographically dispersed productive subsidiaries” (Triandis and Wasti, 2008, p. 2). Multinational corporations are entities that make Foreign Direct Investment (FDI) and produce added value in countries other than the country in which they are headquartered. One of the key objectives of the MNC is to obtain capital where is it cheapest and to invest FDI and undertake production in areas that yield the highest rates of return (De Beule and Van Den Bulcke, 2009). However, many theories have been advanced to account for the decision-making process that MNCs undertake in relation to FDI. The purpose of this paper is to explain the two main theories – internalization theory and OLI eclectic paradigm theory – and to critique these in relation to some of the other conceptual models that have been advocated.

    Read More

  • Krispy Kreme Case Analysis

    2241 Words  | 5 Pages

    Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:

    Read More

  • Business Environment - China Vs India

    1544 Words  | 4 Pages

    In the year 2007, China and India ranked first and second respectively in the list of ideal foreign direct investment (FDI) destinations, according to A T Kearney, a global strategic management consulting firm (The Press Trust of India Limited, 2007a). The two nations, because of their similarities in geopolitical, economic and demographic aspects, are often compared with each other. To determine which one is more attractive for businesses to expand to, this essay will examine the business environment of both countries from the following perspectives: political/legal, economic, socio-cultural and technological.

    Read More

  • The Role of Government Intervention in Developing Nations Economy

    1825 Words  | 4 Pages

    2- Organization for Economic Co-operation and Development. (2008, May). The X-Men: The New York Times. Retrieved from http://www.oecd.org/trade/40672245.pdf. 3- Divounguy, O. & Co. 2010 April 6 -.

    Read More

  • Globalization and Political Policy

    2334 Words  | 5 Pages

    Globalization can in general be described as the growing interaction amongst integration of activities. This mostly affects economic activities of human societies around the world. Nevertheless more realistically, globalization refers to the increasing economic interdependence of countries or states internationally through the escalating amount and variety of cross-border relations and transactions in goods and services and of global capital stream. It is also through the extra speedy and widespread diffusion of technology. In this case therefore, globalization includes both a description and a prescription. This paper examines the economic and political dimension of globalization and tries to link them with development and underdevelopment in the first and third world counties respectively. It outlines the role of the multinational corporations, international trade and fiscal agreements in the globalization process.

    Read More

  • Global Governance: Globalization and Non-State Actors

    2012 Words  | 5 Pages

    “The process of globalization and the increasing role of non-state actors in global governance are undermining the role of the state as the principal actor in global policymaking.”

    Read More

  • Political Environment in International Marketing

    1398 Words  | 3 Pages

    THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country's borders that much of the conflict in international business arises. Nations can and do abridge s...

    Read More

  • History of Multinational Corporations

    2012 Words  | 5 Pages

    The progression and evolution of international business has played an integral role in the overall development and progress of the world economy, culture, and politics. The multinational corporation was an essential part of this process and has roots as far back as the 15th and 16th centuries in Western Europe, specifically in the nations of England and Holland, during a period known as mercantilism. This was a time of unprecedented global exploration, colonization, and other imperialist ventures. Organizations such as the British East India Trading Company, promoted both global trade and the acquisition of natural resources, primarily for their home countries in areas including Africa, East Asia, and the Americas. Global trade was the primary factor in the growth of the world economy during this time. However the modern MNC, as it is known today, did not appear until the 19th century. These new entities provided a new level of inter-firm connectedness, a wider division of labor, and a higher level of product integration across countries in which MNCs are growing. Studies have shown that modern MNCs are characterized by a high degree of complexity, and have not followed a linear pattern in their development. In addition, it is crucial to understand the geographical context in which these MNCs were founded. This paper will analyze the development of the multinational corporation (MNC) from the 1870s to the modern day and examine it what ways, and to what degree it has changed over time.

    Read More

More about Foreign Direct Investment (FDI) and Political Institutions

Open Document