Embed Size (px)
DESCRIPTION
Presentation on the correlation between FDI and government stability.
Citation preview
Foreign Direct Investment and Government Stability
Colby, Christian, Danielle, Luis, and StefanINB 555 Competing in the Global Economy
FDI and Government StabilityAgenda
Question Posed
Country Selection – Stability Ratings
Investing Company Selection
Regression analysis breakdown
Results and analysis
Questions
FDI and Government Stability
Question Posed :
“ Is there a correlation between the stability of a government and its involvement in Foreign Direct Investment?”
FDI and Government StabilityCountry Selection – Stability Ratings
30 Nations from around the world
5 different governing types
Stability Rating 1 or 0
Majority are stable
4 countries with instability
FDI and Government Stability
Country Selection – Stability Ratings
Top Three countries
Different political systems
All three are permanent members of the UN Security Council
One is considered a developing nation
FDI and Government Stability
Investing Company Selection
Europ
e (E
U)
Europ
e (n
on-E
U)Asia
North
Am
erica
South
Am
erica
Midd
le Eas
t 0
4
8
12
8
3
6
11
1 1
Organizations by Location
Developed Nations Developing Nations0
10
20
3025
5
Economic Development
Total Revenue US 2.4 trillion UK 8.6 billion China 7.2 billion
Total Invested US 2.1 billion UK 1.4 billion China 1.5 billion
FDI and Government Stability
Investing Company Selection
Oil & Gas12
Automobile5
Conglomerate3
Retail 2
Commodities2
Finance2
Info Tech1
Telecom1 Electronics
1 Power Utility(Elec.)1
By Industry
FDI and Government StabilityRegression Analysis
• Independent Variables – Stability Rating (SR), The
Top 30 Companies in FDI (TT), GDP (GDP), and FDI stock (FDIS)
– Measured the correlation to overall host country FDI
• R Square = 81.85%• Adjusted R Square =
78.95%• F Statistic = 28.19• SEE = $228,768.85
* Used economic general rules of thumb for critical values
Y = 2,053.25 + 39,776.3(SR) + 0.0000184(TT) + 0.028(GDP) + 0.00000723(FDIS)
FDI and Government StabilityRegression Analysis Cont’d
Variable T statistic Coefficient
Stability Rating 0.312519998 39776.29785
Top 30 Total FDI 0.06283412 1.84186E-05
GDP 0.686520295 0.028163213
FDI Stock 4.395857904 7.23608E-07
FDI and Government Stability
Results
“ Is there a correlation between the stability of a government and its involvement in Foreign Direct Investment?”
FDI and Government Stability
Analysis
Not enough turbulence in sample population
Variety of organization host nations
Stronger way to classify whether a nation is stable or not
Expand number of FDI organizations
FDI and Government Stability
Questions
