Productivity is a variable that permits a nation to maintain high wages, a strong money, and handsome return to investment and with all of them a high level standard of living. Global economy is not a zero-sum game and various countries can expand their richness if they can start improving productivity [World Economic Forum (2005)]. Competitiveness defined as: A set of factors, institutions and policies which establish the level of productivity of a nation and therefore, manage the level of prosperity that can be assessing by an economy [World Economic Forum (2005)]. Productivity is a main driver of the rates of return on investment, which in turn reflects the level of aggregate growth rate of the economy. So, a more competitive economy is the one that is expected to grow more rapidly over the way to long term.
Developing countries have seen the most change thanks to it, but in order to increment their gains, they must also attract foreign investment (Dollar and Kraay 4). It is imperative for a country who is still developing to globalize in order to bring growth and decrease poverty. There have been multiple examples of success from developing countries as a result from trade, and among them are also Mexico, Vietnam, and Uganda; which have achieved success from their comparative advantages (Dollar and Kraay
A common example of foreign direct investment is when a foreign company comes into a country to invest directly to build or buy a factory. (Jun & Sight, 1996) First, China has immense development in relevant infrastructure to attract inward foreign direct investment. It is the fact that the availability of physical infrastructure great influences the decision of investment especially in a foreign land. Company will have more advantage to invest
As the rapid growth rate of economic environment in current world market, economic globalization is affecting emerging countries economic development by increasing oversea business activities such as FDI, export-import, also the culture communication between different countries are interacting and influencing each other during diplomatic business activities. The globalization also simulates innovation and creativity in the emerging countries; it encourages the spirits of entrepreneurship and drives the emergence of innovative business models. China as one of the fastest growing countries in efficiency-driven economy system, where economic growths are based upon manufacturing in domestic markets, outsourcing, and exporting products to foreign
Foreign aid has helped to increase investment activities which has helped developing countries to generate more savings and increased income. Developing countries used the aid as a form of foreign exchange to import goods and services. Most government policies in developing countries are not able to increase domestic savings, therefore inflows in a form of foreign aid helps recipient governments to raise the level of investment (Papenek, 1972). In his studies, Papenek (1973) found out that foreign aid coupled with savings was accountable for economic growth. Foreign development assistance has helped to increase the growth rate of developing countries (Papenek 1973, Levy 1998).
During the period of 1995-2009, the exports hit a high average level. However, Vietnam's export growth was only high when the country is experiencing the fast economic integration. This indicates that the proactive international economic integration and how the process interacts play an important role to Vietnam's economy. Although the share of labor and resource intensive products remains high, the export structure still shows positive shifts, with share of processed products rise. Vietnam's exports different aligned with the world trade, and the world trade growth is proved to be vitally encourage the expansion of exports.
The role of FDI in recipient countries is suggested by several empirical studies as an important source of capital. Chowdhury and Mavrotas (2005), explain that FDI complements domestic investments, improves human capital, increases the level of technology, and stimulates overall economic growth in the host countries. However, some studies carried out at the level of firms such as that by Carkovic and Levine (2005), and that by Gorg and Greenway (2004), do not support the view that FDI plays a positive role by boosting growth in the host
Classical theory of comparative was developed by David Ricardo in 1817 that explained why countries participate in international trade even if the countries labor force are more efficient in producing each good than workers in other countries. He brought into view that if two countries which are capable of engaging in free market then the involved countries increases its consumption by exportation of that good it has a comparative advantage as it imports the other good as long as there is a difference in productivity in labor between the countries. This theory is termed as the most powerful among others responsible in international trade. Outsourcing in China Outsourcing can be indicated to be the most reliable development factor that has played part in the diverse growth in China. The outsourcing process in China begin in the year 2000 and it has been
2) Technology Technology has come to occupy a very important factor in determining the national power of a country. A technologically advanced country can out-maneuver the abilities of technologically weaker country. Even Britain’s conquest of the world was enabled by its huge technological advancement. Industrial technology, communication technology and military technology today form the heart of national power. • Industrial Technology: It adds to economic progress of the country as it enables its goods to be more efficient, more durable and more competitive than the rest.
Availability of these kind of resources especially minerals, agriculture product and raw material become an important determinant of FDI for host country. Malaysia, on the other hand, a medium-size country, having upper middle income developing economy, although it is largely urbanized but the state continues to develop their cultural sectors actively. This is aided well by its rich natural resources. In addition, Malaysia is in condition where it has a political stability which is highly attractive to foreign investment. Hence, FDI appears to a key driver underlying the strong growth performance experienced by the Malaysian economy.