Foreign Direct Investment Summary

Recapitalization can also be considered for several reasons such as defense against malicious acquisition by another company or to reduce taxation. Companies most of the times want to increase their debt: equity ratio so as to buffer liquidity of the company. Basically speaking, when a firm’s debt reduces in the proportion of equity, the leverage level also lower hence “ceteris paribus” its gains per each share should also reduce following the adjustment. Venture capital is one of the most common types of equity financing usually used to fund high-risk and high-investment return businesses. The factor that determines the company’s levels of development when there is investment occurrence, the connections between the venture capital and

In Chapter 1, Rich Nation, Poor nation of The Economics of Macro Issues, the author first identifies the common misconception that economic advantages are predetermined by the natural resources made available to that country. Economic growth is developed by political and legal institutions. Stable institutions are detrimental to the success of the economy because they provide a sense of security for investing. These investments raise capital stock and promote long-term growth which leads to a higher standard of living. Generally, these legal systems follow one of these two models: common law or civil law.

The main source of government revenue became tariffs imposed by each state. Some states instituted policies that placed tariffs on imports from other states, causing conflict amongst each other. The federal government’s inability to regulate trade between states and foreign nations would put the country into a disorganized and counterproductive economy. In addition to the internal issues, it posed the threat of countries such as England and France

By the time, people will getting richer, would have more money to care for their families, and then the term homeless will be avoided. It is known that the largest corporations are leaded by some people who also are part of the government, people who play a significant role in the government decision-making, and my recommendation on this would do not allow the same people who work for government to be bosses of the corporations. Also the State should stop them some privileges that they have with other countries, because those are leading to different disagreements between countries. Trying to stop all these points I mentioned would automatically reduce kills that are happening in order to get the position or the mandate of these powerful

Where the transnational corporations are enterprises that deal with productivity and other activities outside mother land, lead by an international management team and follow an international strategy with the goal of defending stockholders interests rather than national interests. Transnational companies are the most met on an international scale using three major strategies : • Point strategy • Simple integration • Complexe integration Globalization doesn’t only manifest on an economic level, it affects culture, social life, political life as well as technology development since intergration made direct contact and exchange between countries, societies and economies. Where the population is the key influence upon national economy, it is the population who demands the level of production and its quality and at the same time it is the key factor for market development. Globalizing markets offerd population a larger variety of products as well as better quality than national products, example: • Textiles • Sports shoes • Electronics • Vehicles • Construction equipment • Financial services • Airlines •

A country can attract foreign direct investment by devaluing the currency because foreign direct investment will benefit from the weakness of the currency of the host country. The depreciation of the national currency against the Malaysian Ringgit foreign investors will increase foreign direct investment inflows. The exchange rate is one of the most important factors that affect trade between the countries. If the exchange rate rises, banks are relatively more favorable to the exporter, the exporter will be aware to changes in exchange rates. Statutory corporate tax rate is used as a proxy for the effects of fiscal policy to all new investors, ignoring tax holidays, accelerated depreciation and other incentives that reduce the effects of the statutory rate.

There are also several controversies that also ruin their strong economic stability that this also hinder some foreign direct investors to think twice about investing and seek opportunities in their country. This report will focus more on the internal and external factors that are preventing the strong growth of China and give answers to the question of what are the factors that are hampering their growth? The significance of this report is the critical evaluation of the economic performance of this country to understand their weaknesses or strengths and identify the factors that challenges or threatens the economic stability of this

But in a long-run, when trade barriers continue, trade barriers will hurt national economy. One problem that emerges from trade barriers is rent seeking. When local industries tried to lobby the government to give them subsidies or increasing tariff rates to gain more profit, there are no additional value added to the total output thus, there will be wasted resources used for lobbying. This is one example of the inefficiency of trade

This can be a solution for small businesses. Nevertheless, with a contract manufacturing profits usually go to the local company. 1.5.7.3 Wholly owned Subsidiary To establish of a wholly-owned foreign greenfield requires a high-level of financial resources commitment, as the firm has to bear the costs of creating a new firm abroad (Laufs, K., and Schwens, C., 2014; Hill, C. W. L., et al., 1990; Terpstra, V. et al., 2012). However, it means having one hundred percent of the profits; gaining experience and, having access to better feedback from consumers. Below we present two ways to get wholly owned foreign facilities, according to Terpstra, V. et al.

In international trade, the term “Dumping” is used to name a phenomenon consisting substantially in a predatory pricing practice. In fact, Dumping occurs when a country or a company export a product at a price which is lower in the foreign market with respect to the domestic one. Basically this represents a way through which exporting companies/countries strive to gain foreign market share in order to be more competitive in the international context. However, since Dumping often involves substantial volumes when exporting a product, it is said to be dangerous to the financial viability of the producers/manufacturers of that same product in the importing country. This happens because it could be that domestically produced goods may result to