BS3332 ECONOMICS OF MULTINATIONAL ENTERPRISE

BS3332 ECONOMICS OF MULTINATIONAL ENTERPRISE

You have been asked by a government to prepare a short briefing paper for new minister who has responsibility for attracting foreign direct investment (FDI) into a country.

You have been asked to provide the following:
aA brief overview of inward FDI flows into the chosen country over (roughly) the last 10 years (20%).
aA concise discussion of the sources of inward FDI (i.e. which countries it comes from) and the main sectors which attract FDI (30%)
aYour view on likely global trends in FDI over the next five years, and of how the countryas inward investment profile may change. Will FDI rise or fall? Are different countries and/or sectors going to become more important for inward FDI? (50%)

You have the choice to choose any country you like. HOWEVER, make sure that you are able to get enough data, particularly for the second question. Countries such as the UK have a good source of data.

If data is difficult to collect for the second question, you have to be creative. Which large multinationals operate in your chosen country? Which industry do they operate in? Research is often limited to the data you can get. Conversely, sometimes you may have access to much data, which information do you think will be more appropriate for this briefing paper?

The figures in brackets are an indications of how much of the report should be allocated to each section (a brief introduction would also be nice). Like all politicians, the attention span of the new minister is pitifully short, and the report should not exceed 1200 words. A full bibliography is also required, and you can use a maximum of three tables or figures (in any combination). [The bibliography and tables/figures are not included in the word count.]

Remember, it is a briefing paper not an academic essay, and so should be written in a report style. The assignment must be submitted to the coursework office by 12.00 noon on Monday 1st December.

Useful sources
The ONS provides official figures on both inward and outward FDI in the UK (www.statistics.gov.uk). Try putting aforeign direct investmenta in the search box.

Columbia FDI Profiles provide short up-to-date perspectives on FDI in different countries.
http://www.vcc.columbia.edu/content/columbia-fdi-profiles

United Nationsa World Investment Report may also be useful. This is an annual publication, and, as the name suggests, gives an overview of global trends in FDI, as well as discussions of key trends in FDI flows. The 2014 WIR was recently published. An overview and the complete document can be found at www.unctad.org. (put World Investment Report in the search box).

Data can be collected at http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
Some hints and tips

Remember that the first question asks you about inward FDI FLOWS not STOCK!!!

For the first question, you may feel it is necessary to talk about percentage change over certain years. By how much did FDI flows drop due to the financial crisis? Have FDI flows reach pre-crisis levels? Why do some years have higher FDI flows than others? Note I wrote (roughly) the last 10 years- some of you may want to talk about FDI flows from 15 years ago, and some of you may only want to focus on the last seven years. That is fine to do. If you do go back 15 years, there has to be some valid reason to do so, otherwise it is wasting the ministers time- and eating up your word count. Only go over 10 years if there is an important story to tell!

Question 1 and 2 are purely descriptive.

Question 3 requires you to use some rational if you think some countries and industries will become more important. Has there been a new government? Is there an indication if new policies are going to impact FDI flows? Is there political instability? Have there been new investment agreements? What type of FDI are you going to attract (E.g. efficiency seeking, market seeking etc.).

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