FDI

FDI From A Historical Perspective

Who have been the ones giving/receiving the most FDI in the past?

FDI flow has been primarily focused on developed nations. These nations get the majority of the flow of FDI. Developed nations dominate giving FDI as well as receiving. An obvious reason for this is that the more financially established a country is, the more likely it'll have money to invest abroad. The United States has been the biggest giver and receiver of FDI worldwide for the last several decades (Carbaugh 487-552).

Historical shifts in FDI and why?

There have been numerous shifts in FDI throughout the 20th century. Causes of this vary by situation and time. Before FDI became such a dominant force in globalization, it was trade that was the dominant factor. "The primary mechanism of integration has shifted from trade to FDI. Of course, these trends in the growth of FDI, trade and production are not independent of one another. Wars, politics, technology and new markets opening have all been major factors in shifts. Rapid growth of FDI in the first half of the 20th century paled in comparison to the acceleration that occurred after World War II.

Major investors/receivers of FDI and why?

Major investors and receivers of FDI continue to be mainly developed nations. Developed nations accounted for approximately 80% of FDI received and the majority investing. Several reasons for this include their political and economic stability as well as developing high technology that spurs investment. Of the Relocation of corporate functions, production is the top corporate function most likely to be relocated abroad, followed closely by distribution and sales and logistics and support services. By investing abroad firms hope to gain access to foreign markets and technology, improve their efficiency and enhance their firms' specific advantages. Some of the key drivers of FDI continue to be the growing capabilities of firms including those in developing nations, strong export orientation, the desire to access technology and control of strategic assets and resources abroad, both services and natural resources.

Developed nation FDI flows (high and low ends)

FDI flows for developed nations tend to be close to each other on both the giving and receiving ends. Many developed nations have been open to FDI for many years and are well established in attracting and maintaining FDI. Developed nations have however, experienced a decrease in FDI flow in recent years. "FDI inflows into developed countries fell by an estimated 16% to $321 billion in 2004. The continued decline was mainly due to large repayments of intra-company loans for several host European countries. Meanwhile FDI flows bounced back in the UK and US" (Lewis and Margaret 47-63). Nonetheless, FDI is expected to increase as it previously has because of improvements in the fundamental drivers of FDI.

Developing nation FDI flows (high and low ends)

It is clear that there is a large contrast between the high and low ends with developing nations on the flow of FDI. Developing nations have become bigger investors and receivers then ever before. Many developing nations ...