doc. Ing. Tomáš Dudáš, PhD.

Contact information

doc. Ing. Tomáš Dudáš, PhD.

Email: tomas.dudas@paneurouni.sk

Office hours Tuesday 9.30-11.00

Literature and Course RequirementsLiterature

World Investment Report series – free download at www.unctad.org

Assorted papers and articles

 Course requirements

Active participation (max. 3 absentia) Presentation – Topic: Why to invest in .........?

http://www.slideshare.net/tamass

Course layoutForeign direct Investments – introduction

Introduction of the course The place of FDI in the world economy

 Review of the major theories of FDI

The main theories on the macroeconomic level The main theories on microeconomic level Development theories of FDI John Dunning’s eclectic theory

 The latest trends in global FDI flows

The global FDI inflows and outflows Regional trends – Asia, Africa, Latin America and the

developed countries

Course layoutFDI in Central and Eastern Europe with emphasis on Slovakia

FDI inflows into CEE countries from 1990 to 2010 FDI inflows into Slovakia from 1993 to 2010

 

The possible impacts of FDI inflows on the economy of the host country The evaluation of the possible positive and negative impacts of FDI

inflows

The main attributes of the investment attractiveness of host countries Investment climate Macroeconomic attributes Investment promotion

Course layout

Investment promotion as a tool of improving the investment attractivenessTool of investment promotionIPAs – Investment promotion agenciesThe role of investment promotion in Slovakia

Course layout

Case study – FDI in the Chinese economyThe role of FDI in Chinas economic success

 Case study – automotive FDI in the countries

of Central and Eastern EuropeThe current state of global automotive industryAutomotive industry in Central and Eastern Europe

 Review of the course, closing remarks

Introduction

International Economic RelationsInternational Movement of GoodsInternational Movement of LabourInternational Movement of Capital

Any flow of capital that crosses the national borders

Basic forms of international capital movement

Portfolio investmentShort term, profit oriented

Foreign direct investment (FDI)Foreign direct investment (FDI) is defined as an

investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate) – UNCTAD definition

Forms of FDI

Mergers and Acquisitions (M&A)The investing company buys a share in an

existing company abroad

Greenfield investmentThe investing company establishes a new

(production, sales etc.) affiliate company abroad

Sources of FDIEquity capital - is the foreign direct investor’s

purchase of shares of an enterprise in a country other than its own.

Reinvested earnings - comprise the direct investor’s share (in proportion to direct equity participation) of earnings not distributed as dividends by affiliates, or earnings not remitted to the direct investor. Such retained profits by affiliates are reinvested.

Sources of FDIIntra-company loans - or intra-company debt

transactions refer to short- or long-term borrowing and lending of funds between direct investors (parent enterprises) and affiliate enterprises

Global FDI flows in the 1970s

FDI started to play a stronger role in the world economy after WW2 – with the emergence of transnational corporations

New impulse – the oil crisis in the 70sStructural changes in the Japanese economyLabor and resource intensive industries were

gradually moved to southeast Asia (Korea, Taiwan and other countries)

Problems – protectionism and problems with the freedom of capital movement

Global FDI flows from the 1970s until the 2000s

Global FDI flows in the 1980s80s – emergence of global corporations

New impulse for FDIAutomotive industry is a good example

Active Japanese automotive corporationsGoal – to overcome American trade barriers

1983-1989 – the average annual growth rate of FDI outflows was 29 % compared with the average 9,4 % of the global exports

Developed countries received 81 % of the global FDI inflows

Global FDI flows in the 1990s

Fall of the Berlin Wall and the demise of socialism gave a new impulse to the world economy – new markets and possibilitiesCentral and Eastern Europe, India, China

Global FDI flows rose 208 billion USD in 1990 to 1 390 billion USD in 2000

Favorable conditions in the world economyHigh growth in the USA and in western EuropeRise of corporate profits – high number of

mergers and acquisitions

Global FDI flows in the 1990s

Key concepts – outsourcing and M&AsThe growth of FDI flows was especially

strong in the second half of the 1990s due to record level of M&As

The role of developed countries was still strong (71 % of the global inflows), but the share of developing countries was risingSoutheast Asia and Latin America were the

most interesting regionsChina – new leader in greenfield FDI inflows

Sources of FDI data

Global FDI data – http://stats.unctad.org/fdi/

European data – Eurostat

Slovak data – www.nbs.sk