HOMEWORK OF IBM
ASSOC.PROF. Mahmut Arslan
FEYZA KAYA 20312196
ZÜLFÜYE YILDIZ 20212354
FOREIGN DIRECT INVESTMENT:3
Types of FDI4
Advantages of FDI4
Motivations for FDI6
Market-Expansion: Investments versus Trade6
SOME EXAMPLES FOR FDI MOTIVES9
Case: Bridgestone Tire Company9
Foreign direct investment: a case study on Argentina10
Case of Ireland11
Case of Singopare: Foreign Direct Investment13
Case of Mexico: Foreign Direct Investment15
FDI MOTIVES IN TURKEY18
THE STATISTICAL ANALYSIS BY YASED AND TUSIAD18
First, to understand better FDI motives, we can look FDI.
FOREIGN DIRECT INVESTMENT:
Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development. Foreign direct investment, in its classic definition, is defined as a company from one country making a physical investment into building a factory in another country. The direct investment in buildings, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment. In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of a lasting management interest in a company or enterprise outside the investing firm’s home country. As such, it may take many forms, such as a direct acquisition of a foreign firm, construction of a facility, or investment in a joint venture or strategic alliance with a local firm with attendant input of technology, licensing of intellectual property, In the past decade, FDI has come to play a major role in the internationalization of business. Reacting to changes in technology, growing liberalization of the national regulatory framework governing investment in enterprises, and changes in capital markets profound changes have occurred in the size, scope and methods of FDI. New information technology systems, decline in global communication costs have made management of foreign investments far easier than in the past. The sea change in trade and investment policies and the regulatory environment globally in the past decade, including trade policy and tariff liberalization, easing of restrictions on foreign investment and acquisition in many nations, and the deregulation and privitazation of many industries, has probably been been the most significant catalyst for FDI’s expanded role. Foreign direct investment (FDI) is defined as a long-term investment by a foreign direct investor in an enterprise resident in an economy other than that in which the foreign direct investor is based. The FDI relationship, consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC). Foreign direct investment (FDI) has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports and contribute to the long-term economic development of the world´s developing countries. More than ever, countries at all levels of development seek to leverage FDI for development.
Types of FDI
• Greenfield investment.
• Mergers and Acquisitions.
• Horizontal Foreign Direct Investment.
• Vertical Foreign Direct Investment: Takes two forms: 1) Backward vertical FDI.