The Euro-zone Crisis Essay

The Euro-zone Crisis Essay

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In the past decade the world has witnessed a collapse of the world financial system, the Euro-zone crisis, an imploding Middle East, conflicts in Ukraine and natural disasters that have rocked global stock markets and investor confidence.

Global Foreign Direct Investment (FDI) fell by 18 per cent to $1.3 trillion in 2012. This decline was in sharp contrast to other key economic indicators like GDP and unemployment registered positive growth at the global level (United Nations, 2013). The economic fragility and policy uncertainty in a number of economies has caused a domino effect causing concern among investors. However, FDI flows to developing countries prove to be more resilient than flows to developed countries, recording their second highest level. The United Nations (2013) states ‘that they accounted for a record 52 per cent of global FDI inflows, exceeding flows to developed economies for the first time ever, by $142 billion’ (United Nations, 2013). Among regions, flows to developing Asia remained at a historical high level and Africa saw a year-on-year increase in FDI inflow in 2012. (table)

The focus will be on the developing economies as the regions prove to be robust despite under such turmoil. More importantly the two stand out economies that will be representing their respected regions are China and Nigeria. China and Nigeria are both similar in a way because both economies are spearheading their regions in FDI flows.

Comparative Analysis with Various Theories of FDI
Nowadays the issue of FDI is being paid more attention, both at national and international level. Economists believe that FDI is an important element of economic development in all countries, especially developing ones (Denesia, 2010). St...

... middle of paper ...

...ria FDI reached USD11 billion in 2009 according to UNCTAD (Musila & Sigué, 2006).

In 2009, China’s direct investment into Nigeria accounted for 21.10%, making it the most heavily invested by China in Africa. Comparison to The Democratic Republic of Congo

Incentives for investors
The Nigerian Foreign Exchange act allows foreign investors to freely repatriate their profits and dividends. To futher strengthen investor confidence in the economy; Nigeria has entered into various bilateral investment promotion and protection agreements (IPPAs) with trade partners. The IPPAs will instil confidence as in ensures the safety of companies’ investments in the event of war, revolution, expropriation and nationalisation. It will also guarantee compensation in the case of dispossession or loss (Corporate Nigeria, 2010/2011)

Political tensions
Intensified attack by Boko Haram

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