How attractive might a host nation be to foreign direct investment?

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ACKNOWLEDGMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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TABLE OF CONTENTS

ACKNOWLEDGMENTii

DECLARATIONiii

CHAPTER 1: INTRODUCTION1

Research Question1

Background1

CHAPTER 2: LITERATURE REVIEW3

What thrives Foreign Direct Investment?3

Exchange Rate and Tariffs3

Factor Differences3

Mergers, Acquisitions and Competition Pressure4

Foreign Direct Investment4

CHAPTER 3: METHODOLOGY6

Search Technique7

CHAPTER 4: CONCLUSION8

REFERENCES9

CHAPTER 1: INTRODUCTION

The aim of this paper is to propose a study which identifies the factors which a host nation has which attracts FDI in to the country. There are various factors which will be discussed in the study. The study will review previous articles in order to assess how a country is able to attract FDI. This will also be analyzed from the perspective of the investors.

The aim of this proposal is to identify the methods of research the study will follow, and also this proposal will present a literature review of the researches being used. Finally this proposal will conclude by summarizing what to expect from the research (Arnold, 2006, 5902).

Research Question

How attractive might a host nation be to foreign direct investment?

Background

Foreign direct investment has become an increasingly important phenomenon in the last couple of decades. Where many have tried to establish a relationship between the amounts of FDI a country receives and the effects of this entry in the host country, the results vary. Some conclude that there is no relationship or a slightly negative influence of FDI on the growth of a country, although many researchers agree that FDI has a positive influence if the recipient is a couple of requirements that make the investment FDI to be "useful." Most important factors are human capital, a well-developed financial market and a country's openness to trade. The stock of human capital, financial markets and the opening which effectively limits the absorption capacity of a country.

The relationship is not always as clear as one would expect, in the case of Chile is, in fact, the GDP that causes FDI inflows in the country and not vice versa. Although Chile is a special case, the country's growth may be more appropriate, as explained bidirectional causality, where FDI impact on GDP and GDP affect foreign direct investment. It is intuitive that a country with a relatively large amount of GDP in attracting FDI, as it is more likely that a multinational would be able to use the local market to sell their products. This being one of the factors that explain a company can have many reasons why also would invest in a particular country, for example, a small country with relatively low GDP could be attractive to natural resources or labour ...