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“How Have Global Economic/Financial Crises Affected FDI?”

Table of Contents
Table of Contents …..…………………………………………………………………………...2

Abstract……………………………………………………………………………………………3 1.Introduction………………………………………………………………………………3 1.1Preamble
1.2Research Importance
1.3Aim of Work
1.4Thesis Statement

2.Theoretical Background…………………………………………………………………4 2.1What is meant by an Economic and Financial Crises……………………………..4 2.1.1Defining an Economic/Financial Crisis…………………………………………...4 2.1.2Causes of Economic Crisis………………………………………………………..4 2.2Cases of Economic/Financial Crisis………………………………………………...6 2.2.1The Great Depression (1929-1940)……………………………………………….6 2.2.2The Global Recession (The Late 2000s Financial Crisis)………………………...7 2.3FDI in Economic/Financial Crisis…………………………………………………10 2.3.1What is an FDI?...................................................................................................10 2.3.1.1Why do Companies seek FDI Opportunities?.........................................12 2.3.2How FDI is affected by Economic/Financial Crisis?..........................................19 2.4Recovering from an Economic/Financial Crisis……………………………...…..24 2.4.1Why Different Countries have been Differently Affected by the Crises?……….24 2.4.2How Countries Deal with Economic and Financial Crises to Recover………….25 2.4.2The Role of FDIs in the Recovery Process………………………………………27

3.Conclusion………………………………………………………………………………28 References……………………………………………………………………………………….29 Declaration………………………………………………………………………...35 Abstract
1.Introduction
Economies around the world have witness a noticeable growth and development since Foreign Direct Investments (FDI) entered the scene, like in East Asia in the mid 1980s, due to the rapid competition, creativity in market aspects, innovation and increased employment that made such markets just perfect to invest in (Ucal et al., 2010). According to the International Monetary Fund, Foreign Direct Investment is defined as the acquiring of some sort of business of a company in an enterprise in another country or economy (Medina Arango, 2010). Thus an economic or a financial crisis in such market would affect FDI in many forms as well, like also in East Asia in 1997 (Fan and Dickie, 2000).

The importance of such a research to be made is to show the effect of the Financial and Economic crisis on Foreign Direct Investment, and to make a review on some of the recent economic crisis and their relation to the FDI at that time. And since most of past researches was discussing mostly a specific economic or financial crises in specific countries or regions, we tend to further extend studying such topic with focusing more on “the effect of financial/economic crises on FDIs”. We aim to examine the relationship between financial crises and FDIs in different countries and circumstances regarding the changes in rules and policies due to such crises, and to show how crises can make a huge effect on the Foreign Direct Investments in such markets (Medina Arango, 2010) This paper is consisted of three main sections; The first section introduces the prospect and the aim of the study. The second section is divided into four main parts in which three main aspects will be discussed: A definition of what is meant by Economic/Financial Crises, the causes of economic and financial crises, Foreign Direct Investments in such crises, and recovering from such crises and how FDI can have a role in it. Whereas the fourth section is a conclusion made on the entire research. The discussion so far reveals that there is indeed the presence of a significant relationship between the Economic/Financial crises and the FDIs’ functioning in different countries, but the the question we find ourselves asking is how do they affect the FDIs precisely.

2.Theoretical Background
2.1What is meant by Economic and Financial Crises?
2.1.1Defining an Economic/Financial Crisis
According to Kindleberger and Aliber...
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