CRITICAL ANALYSIS

A Critical Analysis ?f Strategies f?r Entering New Markets thr?ugh F?reign Direct Investment

[Name ?f the Writer]

[Name ?f the Instituti?n]

ABSTRACT

The study presents critical analysis ?f strategies f?r entering new markets thr?ugh F?reign Direct Investment (FDI) mainly f?cusing the case ?f the benefits and barriers ?f FDI in Nigeria. Furtherm?re the the study examines the determinants ?f F?reign Direct Investment (FDI) in Nigeria during 1970 till present time. c?integrati?n techniques reveal that the maj?r determinants ?f FDI are market size, real exchange rate and p?litical fact?r thereby validating the?retical expectati?ns. Furtherm?re, simulati?ns using impulse resp?nse and variance dec?mp?siti?n analysis suggest that unc?ntr?lled trade liberalizati?n must be av?ided. F?reign direct investment (FDI) in Nigeria has impr?ved s?mewhat, but its impact has n?t yet reached the p??r. Legislati?n f?r FDI sh?uld be c?mplemented by mechanisms t? ensure transparency. Alth?ugh the G?vernment has all?cated res?urces - am?ng ?thers - t? c?mbat financial p?verty, the sad reality is that in the past 15 years, this has n?t st?pped t? gr?w at a rapid pace. S?me civil s?ciety ?rganizati?ns have indicated that alm?st all pr?jects that f?cus ?n meeting the Millennium Devel?pment G?als (MDGs) are delayed.

Keyw?rds: FDI, C?integrati?n, Impulse resp?nse, variance dec?mp?siti?n

Table ?f C?ntents

ABSTRACT2

Intr?ducti?n4

The?retical Framew?rk5

F?reign Direct Investment Case ?f Nigeria7

P?verty8

F?reign Direct Investment9

P??r ec?n?mic c??perati?n10

T?wards the MDGs10

?PEN Initiative: m?nit?ring and evaluati?n11

Civil s?ciety resp?nses13

Research Meth?d?l?gy14

M?del Specificati?n14

Results16

Basic Statistics And Trends ?n Nigeria's Fdi16

Analysis ?f Determinants ?f Nigeria's Fdi18

C?nclusi?n19

References21

APPENDIX24

A Critical Analysis ?f Strategies f?r Entering New Markets thr?ugh F?reign Direct Investment

Intr?ducti?n

?ne striking feature ?f the w?rld ec?n?my in recent decades has been the gr?wth ?f F?reign Direct Investment (FDI) and the market f?r it has bec?me m?re c?mpetitive. Devel?ping c?untries are bec?ming increasingly attractive as investment destinati?ns, in part because they can ?ffer invest?rs a range ?f 'created' assets (W?rld Bank, 2003). Given the p?tential r?le that FDI can play in accelerating gr?wth and ec?n?mic transf?rmati?n, devel?ping c?untries are str?ngly interested in attracting it. They are taking steps t? impr?ve their sc?res ?n the principal fact?rs influencing the l?cati?n ?f ch?ices ?f direct invest?rs. F?ll?wing W?rld Bank rep?rt (2003), many researchers related FDI t? d?mestic demand thr?ugh what has been called “the size ?f market hyp?thesis. The argument is that FDI will take place as s??n as the market is large en?ugh t? permit the capturing ?f ec?n?mics ?f scale. T? s?me, a c?untry's ?penness, particularly the rules c?ncerning the repatriati?n ?f capital and inc?mes, play imp?rtant r?les in the determinati?n ?f FDI (See f?r instance Lim, 2001 and Digi?vanni, 2005).

There are a number ?f w?rks that are explicitly dev?ted t? the analysis ?f FDI in Nigeria such studies include; Ed?zien, 1968; ?ladip? 1987; L?uis, 1998, Anyawu, 1998 and Akinl?, 2004 am?ng ?thers. Ed?zien (1968) w?rk was pre?ccupied with the linkage generated by f?reign investment and their impacts ?n Nigeria's ec?n?mic devel?pment. Specifically he c?ntends that f?reign investment induce the infl?w ?f capital technical kn?w - h?w and managerial capacity. ?yinl?la (1995), In his ?wn study, he c?ntends that FDI has b?th benefits and c?st repercussi?n in the c?ntent ...