Reference no: EM132410737
For the last two decades, foreign direct investment (FDI) has been offering an unprecedented opportunity for developing countries to achieve faster economic growth. Through FDI, foreign investors benefit from utilizing their firm-specific assets and resources efficiently, such as technology and managerial know-how. For capital-scarce developing economies, FDI implies access to not only capital but also the benefit of acquiring advanced technology, managerial expertise, employment productivity, human resource development, global marketing networks, and best-practice systems of corporate governance. In particular, Asian countries have been successful in attracting FDI. Consequently, FDI in Asian developing countries increased from $396 million in 1980 to $275 billion in 2010, 1 indicating Asia as a main destination of FDI. While dramatic shifts in the composition of recipient countries have changed over time, with China currently becoming an attractive destination for FDI, Southeast Asia continues to remain an attractive hub for foreign investors. Although Southeast Asian countries have been successfully attracting FDI inflows, success in attracting FDI has varied widely between countries. Some countries fare much better than others in attracting and hosting foreign investment projects within Southeast Asia. Within this context, this study aims to understand the reasons behind why certain countries have high FDI inflows while other countries have low FDI inflows, with special reference to countries in Southeast Asia. In particular, the Philippines and Thailand will be examined. The two countries share many of the economic determinants of FDI in common, however, the level of FDI inflows differ substantially
a. Do you think the political institutions can be considered as significant incentives or deterrents to FDI inflows in the Philippines and Thailand?
b. What are the factors contributing for the inflow of FDI in Southeast Asian countries?
c. Do you think the trade and investment policies in the Philippines and Thailand play an important role in inviting more FDI?
d. Trade liberalization is an essential engine for growth for developing countries, Explain this statement with reference to Southeast Asian countries.
e. Higher GDP level of economic development attracts higher levels of FDI inflows. Critically evaluate this statement.