2. Explain the different theories of fdi. Understand how political ideology shapes a government’s attitudes towards fdi

What Are The Patterns Of FDI?

• Both the flow and stock of FDI have increased over the last 35 years
• Most FDI is still targeted towards developed nations
• United States, Japan, and the EU
• but, other destinations are emerging
• South, East, and South East Asia especially China
• Latin America

What Are The Patterns Of FDI?

What Are The Patterns Of FDI?

What Are The Patterns Of FDI?

• The growth of FDI is a result of
• a fear of protectionism
• want to circumvent trade barriers
• political and economic changes
• deregulation, privatization, fewer restrictions on FDI

What Are The Patterns Of FDI?

• new bilateral investment treaties
• designed to facilitate investment
• the globalization of the world economy
• many companies now view the world as their market
• need to be closer to their customers

What Are The Patterns Of FDI?

• Gross fixed capital formation - the total amount of capital invested in factories, stores, office buildings, and the like
• the greater the capital investment in an economy, the more favorable its future prospects are likely to be
• So, FDI is an important source of capital investment and a determinant of the future growth rate of an economy

What Are The Patterns Of FDI?

What Is The Source Of FDI?

• Since World War II, the U.S. has been the largest source country for FDI
• the United Kingdom, the Netherlands, France, Germany, and Japan are other important source countries
• together, these countries account for 60% of all FDI outflows from 1998-2011