Foreign Direct Investment

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Title: Foreign Direct Investment

Bus 502—Global Business Environment
January 27, 2013

The Foreign Direct Investment (FDI) occurs when an organization directly invests in a foreign company or establishes its own facilities in a foreign country for the purposes of manufacturing or producing a product (Hill, 2009). Careful consideration to a foreign country’s economy, regulation compliance and other factors must be researched before making this important leap. Utilizing research from both the Global Edge Site and the FDI Confidence Index from AP Kearny (FDI Confidence Index, 2012), this report will investigate possible countries for our manufacturing processes that will sustain a higher than average return on investment (ROI).

Economic turbulence in the developing countries, specifically Europe, has pushed investors to consider the rise of emerging markets. The A.T. Kearny FDI Index shows strong reporting from Brazil, China and India, but also shows a strong push in confidence with the Southeast Asia markets of Thailand, Singapore, Vietnam, Malaysia and Indonesia. With that said, the forecasted upturn in the global economy recovery was premature in 2011 and investors are skeptical about investing in countries like Brazil, China and India. Therefore, the emerging Southeast Asia market is more attractive, due mainly to economic stability throughout the global economic crisis (Hill, 2009). However, Southeast Asia markets are exciting to watch move up the A.T.Kearny FDI Confidence Index, yet the recommendation doesn’t come without reservations in several key areas.

Reports from the A.T. Kearny FDI Confidence Index indicate that many responses indicate a fear of increased government accountability and reporting in Vietnam, Thailand and Cambodia. Specifically, Southeast Asian countries have reported an increase in government regulations for foreign countries manufacturing processes. Although a concern, this factor is not as big as the possibility of...